By the looks of things, many of you have been so busy building wealth through your businesses in the past few years, you've forgotten something pretty important--namely, a succession plan.
To keep your business running if you die or are otherwise incapacitated, a succession plan is vital. But according to a recent report, 66 percent of business owners haven't gotten around to inking one.
That's one of the key findings from the 2014 U.S. Trust Insights on Wealth and Worth Survey, released Friday. U.S. Trust, the private bank division of Bank of America, focuses on managing the wealth of high net worth individuals. U.S. Trust has put out similar surveys for about two decades, but this is the first one to include data on high net worth business owners and executives, it says.
Here are some of the highlights about the high net worth owners:
- About 87 percent started the business themselves, while 13 percent inherited it.
- 87 percent don't expect their children to continue the business.
- Two thirds of the business owners lack a succession plan; That percentage jumps to seven in 10 business owners, age 50 or more.
- Entrepreneurs with a financial advisor are more than twice as likely to have a succession plan.
The U.S. Trust report polled 680 people throughout the U.S. with with investable assets of at least $3 million, not including the value their primary residence.
Business owners don't have very good reasons for why they lack a succession plan. Some are just procrastinating, others figure a written will or a verbal discussion will suffice. Still others are just blind to how life circumstances can change radically, with more than half saying they simply have no plan of retiring in the near future.
"Many business owners have not made important decisions [about succession planning]," Keith Banks, president of U.S. Bank said in a video conference to discuss the survey findings.
And there's this interesting tidbit too: One quarter of business executives surveyed said they are simply more effective communicating in their businesses than in their personal lives, which may factor into why so many have trouble communicating plans for passing on their businesses to family members.
The big takeaway: Don't leave things to chance. Find a good attorney, financial or other trusted advisor who can help you develop a sensible, documented succession plan.