Aside from prurient interest in a celebrity's estate plan, there is often a lesson to be learned in the structure of the estate plan of the wealthy. The passing of fashion icon Oscar de la Renta on October 20, 2014 is a reminder for all business owners, no matter how large or small the company, to put a succession plan in place to insure the ongoing success of the business.
Oscar de la Renta founded a fashion empire 50 years ago. He often joked that he would never retire and worked up until his death. By all accounts, the long term success of Oscar de la Renta LLC was Mr. de la Renta's creative design work and his personal relationships with clients. Many would describe the privately held LLC as a "one-man show". A week before his death, Mr. de la Renta named a creative director to take over for him and lead the continued development of the company's iconic designs. This last minute appointment raises concerns for the company, as well as the heirs with an interest in the company, whether the new creative director can continue the legacy started by Mr. de la Renta.
Business owners, particularly those whose relationships and talents are central to the success of the company, should consider a succession plan that includes the following:
1. Realize you need a succession plan in order for the business to survive. Consider the best ways to transition the business, relationships, and institutional knowledge to others so they will be able to seamlessly take over from you when the time comes.
2. Create systems and procedures of operation that can function outside of any one individual. Consider what is needed for the company to succeed without your involvement and create manuals, databases, and other documents that shares your knowledge.
3. Identify a successor early and personally train that person, including introductions to clients, vendors, and others important to the ongoing success of your business. Evaluate the succession training and adjust where needed. Where possible, be available for consultation during the succession transition and beyond.
4. Recognize if you have begun the succession with the wrong successor and correct what is needed to insure the right person takes over for you.
Only you know what is best for the continued success of your business and only you can put in place a succession plan that insures the future of your company.