Rust Relates Succession Plan Recommendations
July 18, 2019 | |Jeffrey Rust offered insights in the article, “8 Things to Include in a Succession Plan When Transitioning to Multiple Successors,” which appeared on City National Bank’s Insights web page.
The article details a real-world case of a couple who planned to will their family business to their kids. No formal business documents were drafted to this effect. When the parents passed away unexpectedly, the adult children received unequal stakes in the company. Since there were no governing documents and the siblings could not agree on a resolution, they sold the business.
Jeff notes the importance of a formal agreement that addresses both management issues and buy-sell terms. He discusses the types of terms the agreement should contain. He also talks about the role of the shareholder agreement to protect the interests of minority shareholders. An agreement should also provide for the disposition of an owner’s shares in a business upon death, divorce or disability.
