Creating Business Succession Planning Documents

Dec 2, 2022 | Estate Planning Legal Blogs | Elder Law P.A

For business owners who are considering retiring or venturing into another career but still want the business to run as before, one option is to create a business succession plan. When done in the right manner, business succession planning documents can help you select the individual to succeed you, preserve your legacy, and maintain the continuity of the business.

In this article, we provide you with the essential steps you need to create and utilize business succession planning documents, including what type of documents you will need, and what rules you will have to follow to ensure that there is a smooth transition of your business to your successor.

A key feature of the planning process is the legal documents for business succession planning that need to be written in understandable language. There is no better time to develop a business succession plan than now. Financial experts say that the sooner it is done, the less you will have to deal with any uncertainties in the business management and its operation.


A business succession plan is a distinct document that the business has put together as to what should happen to the business once the owner(s) have left the business, whether it be for retirement, disability, or the start of another career. It should be a key part of the company’s legal duties and structure and should be included in the governing documents from the very beginning. In simple words, a succession plan is not just searching for a person who will be your successor, but documents for business succession planning that take into account the planned transition of a business and serve to try to anticipate any unexpected disruptions, similar to long-term planning for public health.


In order to create business succession planning documents, you need to do the following:

  1. Have an idea of the timeframe when you will be leaving your business. The process and documents for business succession planning take time to create, at least a few years. Once the plan has been created, it will still need to be updated every year because things may have changed in your business or personal life.
  2. Identify your potential successor(s). While many people select someone from within the business to be the successor, sometimes you may have to seek an external candidate. The selection process can take a good deal of time because you will need to vet each candidate to make sure that he/she has the same vision as you, along with the required knowledge, skills, and demeanor. It is important to select a few potential successors because then you will have a wider choice of selection, and if one quits, you always have others on your list.
  3. Get a valuation of your business from an independent professional. After having developed a successful business for many years, you would like to walk out with some financial benefits, and the more you know what the business is actually worth, the more accurately you can figure out your compensation. Sometimes the valuation may reveal deficiencies that can be corrected and boost the value of the business.
  4. Always include an accountant, a lawyer, and an estate planning professional in the venture. This venture has legal and financial implications, and hence it is highly recommended that these professionals be involved early on.
  5. No matter how solid your business and how confident you are, when preparing a succession plan, you have to be prepared for uncertainties. For example, your potential successor may bail at the last minute, your business may suddenly not thrive, or you may have to quit earlier than expected because of a disability or an illness. The more prepared you are, the better your business will be able to handle any adversities.


Once you have decided on the transfer of your business, you need to gather all the business succession planning documents pertaining to your business and start making changes to include your specific requests as to how you want the business to run once you are gone.

If your business has several owners, like a limited liability company or a joint partnership, you will also need to gather the appropriate legal documents for succession planning and make the appropriate changes when you leave or retire.

Review the business policies and make sure that the business succession planning documents have incorporated all that you have requested. This may include writing job descriptions for mid-level positions, setting criteria for job eligibility, and stating when an employee can be terminated or promoted.

Since there is no business succession insurance, you may want to consider using your life insurance benefits to provide for the co-owners of the business. For example, one or multiple partners can purchase life insurance policies for other individuals. If one of the partners was to die, the policy’s death benefits could be used to support the business and/or other partners during the transitional period. In addition, the remaining proceeds then go to the insured owner’s family or heirs.


  1. A partnership agreement if you have a joint partnership
  2. An operating agreement
  3. Articles of organization for an LLC (similar to a partnership agreement)
  4. Articles of bylaws, incorporation, and a shareholder’s agreement for a corporation
  5. Since solo ownership of a business has no governing documents, this means you will need to create and document your wishes for your business with assistance from an estate lawyer so that you can also manage your personal estate planning.
  6. Other documents that may be required include a revocable trust or a will.

It is important to appreciate that a succession plan and a strategy to exit are not the same. Both are documents that deal with planning for business changes, but an exit strategy focuses more on the decision to close or sell the business.


The vital feature of a business succession plan is to assess who will control your business and how management will operate the company in the future. On the other hand, in a small or family-run business, the ownership may be passed on to a family member, usually a child. Upon the death of the owner, the child who is over the age of 18 may be able to appoint a manager to run the business.

A business succession plan is not an emergency, but it should be created early and then reviewed annually. Besides helping plan for retirement, the business succession plan can help you deal with unexpected emergencies.

Elder Law, P.A. has a vast knowledge of business succession planning documents and we have helped many people and their businesses ensure a successful future over the years. Call us today at (561) 933-4681 to get started with a free consultation.

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