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Earlier this week, I had a candid conversation with a trusted business associate about something many entrepreneurs rarely talk about—what happens to our businesses if we pass away unexpectedly.
I get it—it’s not a feel-good topic. It can feel morbid, even uncomfortable. But it’s absolutely necessary.
If you’re a solo business owner, especially one whose “team” includes your spouse, children, or another close family member, you owe it to them—and to yourself—to have a plan in place. Without one, you risk leaving your loved ones overwhelmed, with no clear direction on how to manage your business or transition your clients.
Succession Planning: Not Just for Large Corporations
Succession planning typically refers to the process of identifying and preparing future leaders to take over when key personnel exit. But for many of us who are solo entrepreneurs, succession planning is less about passing the torch within an organization and more about integrating business continuity into our estate planning.
Your business may not have a C-suite, but it still needs a strategy in case something happens to you.
Ironically, just this morning I came across an IRS article titled “Best Practices for When a Practitioner Passes Away.” As someone in the accounting space, the timing was uncanny. I found the guidance surprisingly helpful—not just for tax professionals, but for any solo business owner.
Here are a few key takeaways that I believe are worth implementing no matter your industry:
1. Add a Succession Clause to Your Engagement Letters
One of the most practical things you can do is ensure your engagement letters with clients include language about what will happen if you become incapacitated or pass away.
This kind of clause helps protect your clients and gives your successor (whether a family member or another professional) a clear pathway to continue services with minimal disruption.
Sample Succession Clause:
In the unforeseen event that I become mentally or physically incapacitated, or in the event of my death, I have made arrangements to ensure the continuity of service and the protection of your interests. Should such an event occur during the term of this engagement, your business matters under this agreement will be transitioned to another qualified professional or firm with the appropriate credentials and experience. This transition will be handled with the utmost care to preserve confidentiality, minimize disruption, and ensure compliance with all applicable professional and legal standards. You will be notified in writing of any such transition and provided with the contact information of the successor professional.
(Note: This is sample language only. Please consult with an attorney to tailor it to your situation.)
2. Create a Policy for Client Files and Records
Do your loved ones know what to do with your client records, files, and sensitive data if something happens to you? Establish a clear written policy for how files should be handled, retained, returned, or destroyed. This removes uncertainty and protects both your business and your clients.
3. Implement a Data Security and Privacy Plan
Even if you’re a solo operator, you’re still responsible for the secure handling of client information. Ensure that you have secure backups, password management protocols, and restricted access in place. This way, your clients' data remains protected—no matter what.
A Final Thought
No one likes to think about their own passing or unexpected incapacitation. But planning ahead is one of the most responsible and loving things you can do—for your family, your clients, and your legacy.
If you haven’t already started thinking about a succession or contingency plan, I encourage you to make it a priority.
