Estate And Succession PlanningFINANCIAL FITNESS MAY 2015

Reprinted by permission of the St. Louis Small Business Monthly

Who’s the best person available for the job? For most business owners, that is a question that comes up

dozens of times a year. And it is the most important question in estate and succession planning.

1) If I am unable to run my business, should I continue to own it, and if so, who will run it?

2) If I die, who should own the business and who should run it?

If you cannot continue to work in the business, should you continue to own it? Many busi-nesses produce income that is much greater than the income that could be received by sell-ing and investing the proceeds. But if you are not there to watch it, there is a risk that the income and value of the business will decrease over time.

Who will operate the business? If you have absolutely no candidate, you should prob-ably sell. If you have a perfect candidate, you can keep the business. It’s more complicated when you have an untested candidate. One

absolute: Never put someone you do not com-pletely trust in charge.

The situation changes when you are not living, particularly if you have a surviving spouse who is not in the business. If your family continues to own the business, will it produce enough income to compensate for the risk?

Who can operate the business after your death? Can your spouse oversee the invest-ment? If you put one child in charge, will he think he is working for his parent and siblings, and will the siblings think the new candidate is receiving a huge salary for a job they could easily do? Will the trusted employee who goes above and beyond for you feel as loyal to your spouse and children?

Periodically think about these issues and com-municate your current thinking to your family and your advisers. n

Karen Stern (314-983-1204 or kstern@bswllc.com) is partner in charge of BSW Small Business Services, which provides small business tax and accounting services.

BY KAREN STERN