After building a company and making it a success, business owners may want to use their estate plan to protect the business they have built and provide for their family. This is especially important for those who run a sole proprietorship, partnership, practice or other business that is largely dependent on its owner. However, through careful consideration—and by asking the right questions—business owners can create a plan that supports their family and ensures that their business continues after they are gone.
Do you have the foundation of your estate plan ready?
A surprising amount of business owners do not have an existing estate plan. In fact, 30% of business owners do not have a plan in place, according to some surveys. Writing a will or establishing a trust for your property can ensure that you do not neglect any important details while creating a plan for your business.
What are your family’s wishes?
While discussing your plans with your loved ones is important in any estate plan, it becomes especially important when they may also succeed you as owner of a business. Do your family members want to take on the responsibility of running the business? If only one of your loved ones inherits the business, how can you ensure that the rest of your family feels that they have received their fair share? By discussing these issues with your loved ones, you can avoid future conflict.
Who will take over the business?
Choosing a successor for your business is a crucial step, especially if that means passing the company you have built on to one or more of your family members. While your first instinct may be to have your children inherit the business, you should carefully consider the matter before laying out a succession plan. Once you have determined who will take on the business, make sure that your will or trust includes the details of that plan.
Does your plan address taxes?
Because businesses are valuable assets, your plan should also address the impact of taxes on your estate and your loved ones. You may want to consider placing your business in trust to smooth the transition to a new owner and limit the impact that taxes can have on your loved ones’ inheritance.
By addressing all of these questions about your business in your estate plan, you can protect both your loved ones and your legacy for years to come.