Estate planning checkup: Are your estate and business succession plans aligned?

For many business owners, estate planning hasn’t kept pace with the business itself. Midyear is a great opportunity to step back from day-to-day operations and assess whether your estate and succession plans reflect how your business operates today, and your hopes for the future.

Estate planning often lags behind business growth. Ownership structures evolve, valuations fluctuate, and leadership roles shift—but do your estate and business succession plans reflect those changes?

That disconnect can create risk at precisely the moment when clarity matters most.

The stakes are significant. According to Family Enterprise USA, family-owned businesses generate more than half of U.S. GDP and employ a substantial portion of the workforce. In the San Francisco Bay Area, small and closely held businesses account for a large share of regional employment across industries such as professional services, healthcare, and technology.

Yet long-term continuity is far from guaranteed. Only about 30% of family businesses transition successfully to the second generation, around 12% to the third, and just 3–5% to the fourth. At the same time, succession planning challenges are increasing: 44% of U.S. family firms reported being affected by succession issues in the past year, according to PwC’s 2025 Family Business Survey.

Without a current and coordinated plan, even a successful company can face disruption. Unclear ownership, gaps in decision-making authority, or outdated succession provisions can delay operations, create conflict, and erode value.

This impact may extend beyond your family to employees, partners, and customers. In practice, these gaps often surface at the worst possible time—when leadership is already disrupted by an unexpected incapacity or death. Failing to account for such an event may lead to stalled decision-making, strained relationships, and, in some cases, forced sales that could have been avoided with clearer planning.

Family dynamics add another layer. When some of your children are active in the business, and others are not, questions of control and fairness can quickly become points of tension without clear planning.

These risks can be mitigated through careful planning around key legal factors, including California corporate, probate, and community property laws, restrictions imposed by your business’s governing documents, and estate, income, and property tax exposure.

The counsel of a qualified attorney can address these issues proactively. Even a focused check-in can uncover gaps that are far easier to resolve now than during a transition.

A practical review doesn’t need to be extensive, but it should be intentional.

Key areas to review

Alignment of ownership and estate documents: Ensure your entity structures, operating, partnership, and/or shareholder agreements, and trusts work together seamlessly to avoid unintended outcomes.
Liquidity planning: Confirm you have sufficient assets outside the business to cover estate taxes and expenses, reducing the risk of a forced sale.
Updated valuations: Regular valuations, even estimates, help prevent inequities among beneficiaries and support more efficient tax planning.
Decision-making authority: Verify that the powers granted by your trust, powers of attorney, and the business’s governing documents authorize someone to manage or transfer the business if you cannot.
Transfer restrictions: Ensure your business interest can be transferred to intended beneficiaries under governing documents.
Beneficiary designations: Review accounts and policies that pass outside your trust to ensure alignment with your overall strategy.
Division of business interests: Establish a clear approach to ownership and control, particularly when not all heirs are involved in the business.
Digital and intangible assets: Identify and incorporate intellectual property, data, digital accounts, and AI-enabled tools, ensuring access and transfer protocols are clearly documented.

Trends shaping estate and succession planning

Several trends are influencing how business owners approach these decisions.

Family governance is becoming more structured, with greater emphasis on defining roles, decision-making processes, and dispute resolution mechanisms. These frameworks can help reduce conflict and support continuity.

Liquidity planning is also gaining attention. Rather than relying on a future sale, many owners are proactively planning how to fund taxes and expenses without disrupting operations.

At the same time, estate planning is increasingly integrated into broader business governance. Succession planning is no longer treated as a standalone event but as part of a broader strategy that includes risk management, leadership continuity, and long-term value preservation.

For California-based businesses, these considerations intersect with state-specific legal frameworks, making coordination across legal, tax, and business planning disciplines especially important.

A practical next step

Estate and succession planning is not a one-time exercise—it should evolve alongside your business.

Midyear is a practical moment to revisit your plan, confirm that it reflects your current structure and goals, and identify areas that need attention. Even a brief review can surface issues that, if left unaddressed, could create significant challenges down the road.

Taking action now helps protect what you’ve built, preserve value for the next generation, and provide clarity during unpredictable times. It also gives your family and leadership team the confidence they need to move forward when it matters most.

Francesca Boyd advises clients in all areas of estate planning, estate administration, and estate, income, and property tax law as they pertain to wealth transfer planning. She has experience drafting complex wills and trust agreements, probating estates, administering trusts, analyzing estate and gift taxation matters, and advising fiduciaries and beneficiaries. She can be reached at fboyd@fennemorelaw.com.