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Business owners may think about what would happen to their businesses if they were “hit by a bus,” but few follow through to take action. By creating and implementing a temporary modifiable transition/succession plan, or emergency succession plan, you are able to preserve the maximum value of your business while providing a more secure future for your family and key employees.

The basic foundation of an emergency succession plan is simple:

  • Transfer ownership intestate in the company into a separate “revocable trust.”
  • Identify and appoint appropriate and trustworthy individuals from various disciplines to serve as “sub trustees” (substitute trustees) to succeed you as trustee in the event of your long-term incapacity or death and to serve as a “board” to oversee the management team and make short-term and long-term decisions for the company.
  • Establish a reasonable time frame and parameters for the substitute trustees to divest the trust of the ownership interests, including to employees, to third parties or through liquidation.
  • Provide for circumstances where the designated time frame can be extended with appropriate consents.

While the foundation for an emergency succession plan is simple, one size does not fit all and, as such, each “hit by the bus” transition/succession plan needs to be specially crafted to fit the unique facts and circumstances associated with each business and individual owner. Our business attorneys have experience in examining the facts and circumstances to craft a succession plan fitting the business and individual’s needs. If you have questions about succession planning, contact a member of our business law department at 301-340-2020.

Millard Bennett is a founding principal of Stein Sperling Bennett De Jong Driscoll PC. His practice is concentrated in the areas of business organization, business ownership conflicts,  conflict resolution, transition of ownership interests, estate planning and civil litigation. Millard’s background in business, as well as his experience in running a successful law firm, gives him unique insight into the legal and financial needs of the business clients he serves.