Besides estate planning, you must have a succession plan that specifies how your company and your family will prepare for a transition of ownership.
The topic does not deserve any priority from an entrepreneurial perspective. Small business owners have their hands overflowing with issues, and they devote most of their time to matters related to the smooth running of the business. Having no time to think about other matters, they do not bother about estate planning for them. Not having an estate plan would put entrepreneurs in a tight spot as they might face difficulties in keeping the business running if they have to withdraw from the business at any point in time.
Estate planning is necessary to ensure business continuity. Someone can take up the reins when you are no longer present, and the business continues according to your wishes contained in the estate plan. Business attorneys from Crow Estate Planning and Probate, PLC can help business owners to draw up an estate plan so that things become easy for their loved ones in case of premature death or any permanent disability.
Recognizing the importance of outlining your wishes about how the organization will run in your absence, you should take the following steps to do good estate planning.
Start with a will and primary estate plan
A will clearly state your wishes about how you want the business to run and the manner of sharing your property upon your death. Power of attorney allows an entrusted individual to undertake your business transactions and manage your finances when incapacitated. The healthcare directive in the will allows your trusted person to make medical decisions on your behalf when you cannot take your own decisions.
In the absence of a will, the state’s laws would determine the manner of dividing the business and inheritance of your property.
Plan for tax efficiencies
Tax planning is a big part of estate planning. Since tax laws keep changing frequently, you must stay in constant touch with your attorney and financial advisor to develop strategies for deriving tax efficiencies. Look for ways of minimizing inheritance/ estate taxes and mention them in the estate plan. Besides inheritance and estate taxes, there are other taxes to consider with equal importance. An estate planning attorney can guide you well to accomplish your goal.
Buy life and disability insurance
Small business owners must have Life Insurance so that beneficiaries can have a source of income after their death. Ideally, your family should be the beneficiary of the life and disability policy, and the business is the beneficiary for a key person life and disability policy. The beneficiaries receive the payouts upon your death.
Create a succession plan
Besides estate planning, you must have a succession plan that specifies how your company and your family will prepare for a transition of ownership. The objective of a succession plan is to keep running a viable business or take steps to sell the business. It also includes the organizational structure of the business in case of maintaining business continuity.
Keep all affected parties informed about your estate plan and update the plan to maintain its legal relevance as per the current laws.