Estate planning is often a complicated process. It is more involved for some people than for others. The more complex your personal property and family circumstances are, the more difficult estate planning can be.
Business owners often have both family complications and asset-based concerns to consider when estate planning. Addressing the three following concerns early in your estate planning process will make it easier for you to ensure the smooth transfer of ownership for your business and its management after you die.
1. How will you pass the business to someone else?
Whether you want your spouse, your child or your protege to take over the company, you will have to transfer your ownership interest to them. You might choose to do this when you retire, or after you pass.
The way that you hold ownership and the structure of the company will determine the best way for you to pass your interest in the business to someone else. You will also need to consider the tax implications based on the value of the company.
2. How will your successor know what to do?
You probably do a lot to keep your company running smoothly. It can be hard for someone to learn how to handle everything that you do, especially if you won’t be there to train them.
Creating an in-depth succession plan that explores all of your responsibilities with the company and includes all of the information, like account logins, that only you know will ensure the seamless continuation of business after something happens to you.
3. What happens if you wind up in the hospital but not dead?
There could be situations where you can’t run the business anymore but you aren’t dead. Suffering a stroke or winding up in a coma after a car crash are both scenarios where someone is alive but unable to take legal or financial steps on their own behalf.
Creating power of attorney documents that give someone authority to make business transactions is important. Giving them access to certain accounts will be crucial. You can also limit what authority they have so that they can’t deplete company resources for personal gain.
Your business represents a major investment and a big portion of your personal legacy. Carefully thinking about how it will continue to operate after something happens to you will protect your loved ones, your employees and the business you have worked so hard to build.