As anyone who runs or has run a business, it’s hard work no matter the size. For business owners, the goal is success, sustainability, and one day, when its time to let the business go, succession.
To make sure you, your family, and your business are prepared for an unexpected event, injury, or illness that could derail your ability to run the business, consider estate planning. It can be a morbid thought because an estate plan makes you confront the end, but estate plans also help organize and protect a new beginning.
For small business owners, specific actions can help you plan for the future.
Consider the following strategies.
Create a will
A will is a company’s safeguard, allowing the testator (the creator of the will) to decide who will take over operations if the current owner becomes incapacitated. Without a will, your company, and all of its entities (employees, clients and partners), would be facing uncertainty if something unexpected happened to you, the owner.
Minimize estate taxes
If a business owner were to pass without a plan to minimize estate taxes, that could spell the end for the business. Because estate taxes can reach up to 50% of the company’s valuation and must be paid within nine months form the owner’s death, many businesses sell to meet the extreme tax amount and payment deadline. Fear and loathing aside, there are specific tax breaks available to protect your business from some of the grubby estate taxes.
Prepare a succession plan
A life-altering event can happen at any moment, which males preparation essential. A succession plan allows the business to continue with only a minor interruption if the owner were to pass away or become unable to perform the necessary duties. A succession plan will enable you to outline a business transferring strategy.
Assign your power of attorney
Don’t leave this decision up to the court. They don’t know the intricacies of your business and the relationships within it. If a life-altering event occurs, you would want your business to have a trusted legal guardian. By declaring “power of attorney,” you choose an individual who will handle all legal aspects of the company if the owner becomes unable to do so.
Prepare yourself, your estate, and your business for the future. Other steps include obtaining life insurance and considering the creation of a charitable trust.
Estate planning attorneys are a great resource to not only prepare the necessary documents, but to advise you on what’s best for the future protection of your business and family.