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Family Succession Planning

A comprehensive estate plan of any business owner addresses how the business will be continued or ended after the owner's death.  Survival of a small business without an able owner, executive, or shareholder at the helm is unusual. In the event of a key member’s sudden death, illness, or retirement, businesses are often left scrambling to recover lost assets and find a replacement.  A tumultuous transition can be smoothed by creating a practical and enforceable succession plan with a knowledgeable attorney.

Without a Plan
If an owner, executive, or shareholder does not have a succession plan in place, his or her stake in the company is either passed on to relatives as part of the estate, absorbed by other shareholders, or a combination of the two.

In family-owned businesses, disputes may occur between siblings and other relatives. Those more active in the day-to-day operations of the business may feel entitled to larger shares than others who are less involved.  Family or non-family employees and clients may leave the company for fear of instability, shareholders may not be able to buy out the extra shares, and temporary replacements may not be equipped to lead the company through such a delicate time. In addition, if a spouse or other relative inherits the shares of the deceased owner, disputes between  shareholders may occur, stalling progress and possibly leading to a loss of assets.

With a Plan
An attorney with expertise in practical estate planning for business owners can help owners and shareholders make a plan to provide a smoother transition process. Plans are customarily created to carry out the key business owner's goals for the business's future after employees, coworkers, other shareholders and family members have been consulted. Though succession planning can be tailor-made to fit any business model, it typically involves either retention or buy-sell retention.

  • Retention Planning involves keeping the business or shares within the family. With a retention plan a spouse, children, or other relatives will retain control of assets.
  • Buy-Sell Retention Planning offers the other shareholders or vital employees a larger stake in the company. Interested parties stipulated in the plan will be granted the right of first refusal, or the ability to accept or reject the shares before they are offered to individuals outside of the company. The price of the shares will be determined by a valuation mechanism agreed upon during succession plan negotiations. For example, a valuation mechanism may require that shares be offered for their prevailing full market value, or require multiple professional business valuation appraisals.


Properly drafted succession plans provide the remaining members of the company with a procedure to follow in case the unexpected happens. Planning can designate a competent successor, a successor will be named who will be able to guide the business through the transition, reassure employees about their job security, and put safeguards  in place to protect the company from loss. A pension or retirement fund may also be written into the plan.

Other arrangements can be made that would transfer the owner's interest into trusts to be paid out to family members. Assets may also be divided among employees.  In other cases, it may be best to sell the company. With so many factors to consider, it is important that you consult a  planning attorney who can understand all of the interests at stake and work with you to protect them.


Our attorneys assist families in Plainfield, IL and the surrounding areas, including Joliet, Naperville, Aurora, Bolingbrook, Channahon, Crest Hill, Lockport, Minooka, Oswego, Romeoville, Shorewood, and Yorkville, in Will County, DuPage County, Kendall County, and Kane County.



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| Phone: 815-436-1996

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