**Business Succession** (noun) — The process of planning for the continuation, transfer, or orderly wind-up of a business upon the death, incapacity, or retirement of the business owner, including arrangements for management transition and ownership transfer.
Business succession planning addresses a question many business owners avoid: what happens to your business if you die or become incapacitated? Without a plan, your business might have no legal authority to operate, access to funds might be frozen, and value could evaporate quickly.
This isn't just about transferring ownership—it's about ensuring the business can continue functioning during the transition period.
⏱ When you'll encounter this term
Good business succession planning considers multiple scenarios: sudden death, gradual retirement, or incapacity. It addresses who has authority to run the business, how ownership transfers, how the business is valued, and how other beneficiaries are treated fairly if the business goes to one person.
For partnerships, this often involves buy-sell agreements funded by life insurance. For family businesses, it might mean clear roles for family members who work in the business versus those who don't. For sole traders, it could be as simple as ensuring your executor knows how to wind down operations and collect receivables. The complexity scales with the business, but every business owner needs some level of succession planning.
**Related terms:** [Estate Planning](/dictionary/estate-planning), [Trust](/dictionary/trust), [Power of Attorney](/dictionary/power-of-attorney), [Executor](/dictionary/executor)
---
"Dad owned a plumbing business. His business succession plan designated my brother (who worked in the business) to take over operations, while my sister and I got equivalent value from other estate assets."