Business Succession Planning

Defined as a strategy for passing each key leadership role within a company to someone else in such a way that the company continues to operate after the incumbent leader is no longer in control.

Succession planning ensures that businesses continue to run smoothly after the business’s most important people move on to new opportunities, retire or pass away.

For small, family-owned companies, succession planning often means training the next generation to take over the business. A larger business might groom mid-level employees to one day take over higher-level positions.

In a partnership, one method of succession planning has each partner purchase a life insurance policy that names the other partner as the beneficiary.

That way, if a partner dies at a time when the surviving partner otherwise wouldn’t have enough cash to buy the deceased partner’s ownership share, the life insurance proceeds will make that purchase possible.

This type of succession plan is called a cross-purchase agreement and allows the surviving partner to continue operating the business.

 

Contact LRJ&A and schedule an appointment to discuss your succession plan with one of our insurance professionals.