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Sunday, November 21, 2010

Succession planning malpractice

This article tells the all too common story of a person running a business who didn't put a succession plan into place. He was a financial advisor, and when he died of cancer, his failure to plan left hundreds of clients in the lurch. Click here to read it.

The line in this article that struck me was that the business owner felt that there would be time for a transition plan. He had a son who would eventually take over, though no steps had been started yet. However, he contracted cancer and time ran out. When I talk to business owners who have as yet done no succession planning, that line about having plenty of time is first and foremost. That's because when the business owner thinks about succession planning, he or she thinks about retirement. It's something they feel they can control and it's in the distant future. They know they don't want to retire for years to come so they don't feel as if they need to start planning.

Unfortunately, as with the business owner in this story, not everyone gets the chance to retire. Succession planning should always include plans for the unexpected, such as illness and premature death. The business owner's Will and Power of Attorney should be drafted in conjunction with the succession plan so that no documents contradict each other.

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