Succession plans are detailed documents created by those in executive, ownership or managerial business positions. As someone with a high degree of business responsibilities, you need to make sure the business can continue to operate if anything happens to you.
Succession plans typically focus on outlining the responsibilities of someone’s job so that another person can fulfill those obligations. An owner or executive might include details not integrated into training materials in their succession plan, such as digital logins and financial account information.
However, succession plans don’t just have to do with running the company but also with its ownership A succession plan may also need to address how to transfer ownership of the business to someone else.
One of the most straightforward ways to handle this process is to move ownership of the business into a trust either now or in the event of your inability to do your job. You will then need to appoint someone as trustee in the event of your death or incapacitation. How do you pick the right person?
A trustee must be responsible and ethical
As the name of their position implies, a trustee occupies a role of implicit trust. They have legal and financial authority over matters that can drastically impact others. A trustee has a fiduciary duty to the trust itself and its beneficiaries, which in this case might be the business or the person who will assume ownership over the company.
Although it may seem like the most straightforward solution, naming your successor as trustee probably isn’t the best choice. Choosing someone else that has demonstrated both competence and trustworthiness will provide an extra layer of oversight for the company’s transition. You might turn to another executive or manager for this important role.
The trustee has to be willing to accept the responsibility involved
Simply choosing someone competent enough to fulfill the duties of trustee when it comes to transferring ownership and management of a business isn’t enough.
You will also need to talk to that individual and make certain that they accept that responsibility. Otherwise, they may decline the position, undermining all of your careful planning.
Choosing the right corporate trustee is part of your succession plan will be a major decision. When you understand how important that role is, you will do a better job of selecting the right candidate.