From naming a guardian for your children to laying out your wishes for your home, your car and your savings, your estate plan must address many different details of your life. As a small business owner, though, your estate plan should address more than your personal possessions and your home. It should also provide your loved ones with instructions for the company you have built.
Establishing a trust can protect your privacy and your business.
In addition to writing a traditional will, business owners may want to establish a trust to protect their business after their passing. A trust allows business owners to transfer the business immediately to their beneficiaries and allow your successor to take up business operations when you pass away or if illness makes you unable to manage it yourself.
Create a plan to address incapacitation.
Just as a trust can protect your business if illness or injury leave you incapacitated, power of attorney provides guidelines for your legal and financial affairs. Whether you act as sole proprietor of your business or handle important aspects of a business alongside a partner, this document allows you to name a person to act as your agent. Your agent can manage your finances, pay your employees and other business connections, sign paperwork and manage the legal transactions that keep your business running.
Create a detailed succession plan to ease the transition.
When one of your loved ones wants to keep your business going after you pass away, creating a succession plan allows them to operate the company. List our your business contacts, keep a detailed record of the business’s accounts and detail any other information that your successor may need to know to begin running your business.
Lay the groundwork for your business’s sale.
If your loved ones will not continue your company after your death, be sure to have a plan in place for the sale of your business. Document the value of your business and keep your paperwork in order if your business is a sole proprietorship, or create a buy-sell agreement to establish how your loved ones can sell their share of a partnership.
With careful thought and experienced legal guidance, you can create an estate plan that protects your business as well as your loved ones.