4 tools for estate planning as a business owner

by | Apr 24, 2020 | Estate Planning |

You have spent years—perhaps even a lifetime—building your business to support yourself and to provide for your family. Creating a clear estate plan is the best way to continue to support your loved ones and build the success of your business after you are no longer able to run that business yourself.

1. A succession plan

If you intend to pass your business on to a family member, it is important to have a clear succession plan. Through this plan, you can designate who you want to take control of your business and how you want your business to be run. Even if everyone agrees now about the person who should take over the business, it is important to have this information in a legal document.

2. The foundation of your business’s sale

If you do not intend to pass your business along to a family member, it is important to get your business ready for sale. Because the sale of a business can take a long time—small businesses take an average of 8.6 months to sell—it is important to lay the groundwork for that sale now. This can include making a detailed list of all of the accounts associated with the business and ensuring that your executor has access to any important programs or files that support the operation of your business.

You may also want to specify in your will that the business is to be sold after the death of its owner. This can make your wishes clear and eliminate conflict for your grieving family.

3. Powers of attorney

You may have your will in place to prepare for the end of your life, but do you have a plan prepared for your business? If you are incapacitated due to illness or injury, having powers of attorney ensures that someone you trust is designated to make the legal and financial decisions necessary to keep your business operational.

4. A living trust

The will may be an essential part of the estate plan, but a living trust can be an important way to save your loved ones from the costs of inheriting your business. A living trust can operate your business without ownership transferring directly to another person while still allowing you to designate your successor.

As the New York Times notes, establishing a trust can also keep your business’s affairs out of the public eye because it avoids the probate process. If you and your family value privacy, this can help your loved ones avoid a great deal of stress during an already difficult time.

Every business is different, and an experienced attorney can help you explore the options available to you and choose the right estate planning tools to protect your business and support your family.