We wrote an article for this column that was published back in July of 2015, titled “Estate Planning Consideration for Closely Held Business Owners.” A parallel topic for business owners, that we did not address in that article head on, is the myriad ways in which businesses are transitioned once the sole owner of the business exits, whether by accident (i.e., death or disability) or by design. Many of our clients continue to actively control their businesses until their deaths and succession must be addressed by the personal representatives of their estates. Others implement an effective “transfer of power” for their businesses during their lifetime and either retire completely or continue on as a consultant or employee of the business. Sometimes when there is a transfer of power, the business is sold, but other times ownership is retained.

The simplest, and perhaps the most ideal way for a client to exit a business, is to sell it during his or her lifetime, be available as a consultant during a transition period, and then either retire or start a new venture. For that to happen, the business must be stable enough to create an attractive environment for a strong, capable and loyal management team that can continue to operate the business without the active participation of the owner. It’s sort of like raising children who will one day leave the nest, except the idea here is that rather than abruptly leave the nest, they will instead hang around to maintain it and potentially help to expand it.