Kirby Millwood CPA, Partner/Estate, Gift & Trust Group 

Small business owners are entrepreneurial. They’ve built their enterprise from scratch. They make daily decisions, manage relationships, and hold all the institutional knowledge in their heads. With all that busy-ness, conversations about formal business succession and estate planning can understandably land at the bottom of the priority list.

Retirement can feel far away, but it’s about more than an exit strategy. It’s about planning for the unexpected. That means waiting comes with real risks – for your family, your employees, and the business itself.

Estate Planning Isn’t Just About Taxes

Business owners often believe estate planning is mainly about taxes. With today’s federal estate tax exemption at historic highs ($15 million per person, adjusted annually for inflation) many owners assume they don’t need to worry about it.

Think of estate planning as less about taxes and more about continuity.

Planning can answer critical questions, such as:
• What happens to the business if something happens to me tomorrow?
• Who can step in to run it in the short and long term?
• How does ownership transfer, and to whom?
• How do I avoid disruption, conflict, or a forced sale?

For business owners, those questions matter just as much – if not more – than tax exposure.

The ‘What If’ Scenario Most Owners Avoid

Business owners not only delay conversations about retirement, but also the question of ‘who’s in charge’ if the unthinkable happens – illness, disability, or death.

Without a plan, employees reliant on the business income may not know who’s steering the ship. Customers and vendors may lose confidence. And family members can be left trying to make decisions while grieving and stressed, often without a full understanding of the business.

A thoughtful succession plan helps ensure the business can continue operating while bigger decisions are made.

Succession Planning Is a Process, Not a Retirement Deadline

Succession planning shouldn’t wait until you’re ready to retire. Owners in their 30s and 40s benefit from it just as much as those nearing an exit.

At a minimum, it involves identifying who could step in during an emergency, transitioning knowledge to the next leaders, and determining longer-term ownership. In the case of an unexpected death, business ownership can be divided in unintended ways without thinking ahead.

Keep in mind, however, that plans can evolve based on your goals. Some owners plan to transition the business to a family member. Others look to key employees. Some eventually plan to sell to a third party. Increasingly, owners are exploring employee stock ownership plans (ESOPs) to reward employees with partial ownership while creating a workable retirement plan.

There’s no one right answer, so the goal should be to start conversations early.

How Business Succession and Estate Planning Fit Together

Business succession planning and estate planning are intertwined. Decisions about ownership, control, and timing directly affect how assets are handled after death.

A strong estate plan helps ensure business interests go to the intended people, assets are transferred efficiently, family dynamics are considered, and loved ones aren’t burdened with complex legal and financial matters during a difficult time.

It also gives owners the opportunity to think beyond taxes and consider their core values, such as supporting children differently, protecting assets in trust, or incorporating philanthropy into a long-term plan.

Common Mistakes That Create Big Problems

Over the years, several issues have come up again and again:

Doing nothing – Not having a will means state intestacy laws decide how assets, including a business, are divided. Rarely does the result match the owner’s wishes.

Outdated beneficiary designations – Life events like marriage, death, divorce, or the birth of a child often aren’t reflected in beneficiary forms. That can cause assets to pass in unintended ways. Blended families are especially challenging, and if any child has felt slighted in the past, conflicts are likely to arise.

Accidental favoritism – Making one child joint tenant with right of survivorship of a bank or brokerage account, rather than signature authority alone, can cause that asset to bypass the will entirely and create resentments among the other siblings.

Overcomplicating the plan – Multiple trusts and structures can make administration far more difficult for surviving family members than it has to be.

Failing to fund trusts – A revocable living trust that doesn’t hold assets doesn’t accomplish its purpose. A qualified attorney can walk through the steps involved.
Each of these mistakes is common, yet avoidable.

Opportunities to Take Action

For some business owners, today’s estate planning environment presents real opportunities.

With higher estate tax exemptions in place, it may make sense to explore:
• Gifting interests in a business to family members over time
• Using valuation discounts when transferring minority interests
• Moving appreciating assets out of the estate earlier
• Reviewing whether life insurance should be held in trust to reduce estate exposure

These strategies aren’t right for everyone, but they’re worth discussing while the rules are relatively clear.

A Plan That Protects More Than Assets

An intentional business succession and estate plan protects your family from uncertainty and conflict, your employees from disruption, and your legacy from unexpected outcomes.

The hardest part is starting the conversation. But once you do, the path forward becomes far more manageable with a team approach. A CPA expert in estate and transition planning can help bring the professionals together – attorneys who draft buy-sell agreements, financial advisors who help align investments, and life insurance professionals who structure coverage.

If you’re a business owner who hasn’t revisited these topics recently, now is a good time to ask: What happens if I’m not here tomorrow, and am I comfortable with the answer?