By: Solid Serenity Legal Services
Many people don’t want to think about what will happen after they die. Business owners are no exception. But, planning, though important for everyone, may be even more important for business owners.
Have you thought about what happens to your business when you die? Who will take over? Will your family receive a portion of your business, or step in and run it?
Do you want the power to make those decisions, or do you want to leave it up to a Court to decide? Most business owners are not comfortable with the prospect of giving a Court control to decide who will run their business, or whether the business will continue.
Even fewer business partners are comfortable with an unfamiliar partner’s family member having say so in a business they’ve had no hand in running.
3 Important Plans for Businesses
Businesses that have more than one owner have a greater need to consider estate planning, succession, and even life insurance plans for their owners. As a partner in a business, how would you feel if your partner’s long lost cousin, and only heir, were given control of his portion of the business when he died unexpectedly?
Also, as businesses grow, so do their assets. At some point, tax planning considerations may come into play. Though these considerations are part of a larger estate plan, they are likely to affect a business owner more than an employee.
Estate and Succession Planning
At the very least, business owners should have a Will that states who their assets, including their businesses, will go to when they die. Owners should also consider having a trust put in place to avoid probate and continue the business as seamlessly as possible on death or disability.
For businesses with more than one owner, business agreements between the owners are absolutely critical. These documents will lay out actions for buying out other members, dissolving the business, and handling death or disability.
Without a business agreement, owners who need to sell their interest or back out of a business find themselves in difficult positions. They have no rules to follow.
Do yourself a favor and make a plan with your business partners now. Especially, if those partners are people you don’t know very well.
Life insurance policies are a crucial element to any estate plan, but they are especially vital for owners. They provide funds for family members to pay business and personal debts, or, in the case of multiple owner businesses, they allow the business members to buy out heirs on the death of another member. They provide large liquid assets the business may not otherwise have.
Business owners and entrepreneurs are in a class all their own. They are progressive, hearty, strong individuals. They are more likely to take risks, but leaving succession to chance is too great a risk to take.
Entrepreneurs owe their families the safety and security of healthy estate plans. Reach out to a trusted professional to get your plans in order today!