Even if they acknowledge its importance, many business owners delay succession planning because they think it will be too complex or they simply don’t want to consider what will happen to their business when they’re gone, said Darin Drennan, wealth planner for Arvest Wealth Management‘s Advanced Planning Team. As business assets often represent more than 70% of an entrepreneur’s net worth, according to recent Federal Reserve data, the absence of a plan can put decades of achievement at risk.
Despite the significant risks, many business owners delay developing a succession plan, said Drennan. “This same ‘I’ll deal with it later’ thinking is also common regarding their personal wealth,” he said. “They may assume there will be plenty of time to organize their affairs later, but unexpected events, such as an illness or accident, can force decisions under pressure.”
Many believe having a will is sufficient protection, but a will is merely a set of basic instructions, Drennan added. “Without additional estate planning tools, it must still navigate the probate process, which can be expensive and disruptive personally and to business operations.”
Where to Begin
Effective planning doesn’t have to be daunting, but it does requires having the right advisors and a deliberate strategy. Drennan offered these steps to help you start the process.
- Start with a valuation. Conduct a detailed assessment t of your business and personal assets, including ownership interests, intellectual property, real estate and insurance policies with a qualified valuation professional. If your successors will need financing, a professional valuation is often required by lenders.
- Build you advisory team. Include your financial advisor, accountant and an attorney who specializes in succession planning. Together, review ownership structures, tax exposure and transfer options such as gifting shares or selling equity to family members or key employees.
- Explore succession structures. Consider an Employee Stock Ownership Plan (ESOP), management buyout or family limited partnership. The right choice depends on your business model, liquidity needs and long-term vision
- Establish a living trust. A revocable living trust allows you to retain control during your lifetime, while ensuring a seamless management transition if you become incapacitated or pass away. It also avoids probate delays and maintains operational continuity.
- Create a continuity plan. Define who makes decisions if you are suddenly unavailable. Document procedures, designate signatories and outline interim leadership roles.
- Organize and communicate. Maintain a secure, centralized repository for key documents, from insurance policies to operating agreements, and share relevant materials with successors and fiduciaries.
- Review regularly. Revisit your plan every few years or following major business changes, such as a merger, acquisition or leadership shift.
- Leverage institutional expertise. Financial institutions, such as Arvest, offer dedicated succession services and continuity planning support. Our team of professionals can help execute transitions, settle estates efficiently and manage assets to sustain income for beneficiaries.
A Strategic Imperative
Succession and estate planning aren’t simply legal or financial exercises for owners. “It’s the ultimate act of stewardship,” said Drennan. “A succession and estate plan ensures that your company’s mission, culture and impact continue beyond your tenure. Having one safeguards the livelihoods of employees, families and communities that depend on your business.”
To learn more about Arvest Wealth Management services or connect with a trust officer or client advisor, visit arvest.com/wealth.
