For many Vietnamese families, their business is more than just a source of income. It represents years of hard work and sacrifice.
You likely want your business to be a legacy that supports future generations. However, unless your estate plan includes a succession plan, your family and business may face unnecessary conflict and perhaps closure.
What is a succession plan?
A succession plan is a clear, documented strategy that explains who will take over your business if you retire, become incapacitated or pass away. While your estate plan focuses on who inherits your assets, your succession plan focuses on who will manage them. The two should work together.
In many Vietnamese households, it’s common to build a family-run business and expect the children to eventually step in. It’s also generally believed that talking openly about death is disrespectful and bad luck. However, when plans aren’t written down, the courts end up making the decisions, which may not align with your beliefs or honor your wishes.
Without a proper plan in place:
- Your business may go through probate.
- Family members may disagree about leadership.
- Taxes and legal costs can reduce the value of what you leave behind.
- Delays and mismanagement may cause your business to fail.
Your succession plan should include training a child or a trusted individual to take over the business if you become incapacitated or pass away. You can also structure the ownership to reduce taxes and minimize conflicts.
A well-designed estate plan can include:
- A revocable living trust to avoid probate
- Clear instructions on who controls the business
- Powers of attorney for financial decisions if you become incapacitated
It’s easy to assume that your children and spouse will figure everything out, but that often leads to confusion and loss. Your children may not want to run the business, or they and your spouse may not have the experience to do so.
If you are a business owner, now is the time to sit down with a legal professional to discuss a properly structured succession and estate plan to help ensure that your legacy continues, your family is protected and your wishes are honored.