In the current climate, it is becoming increasingly difficult to maintain and protect small businesses. One way you can ensure your businesses’ safety and financial security is through estate planning. While the success of your business is undoubtedly a priority, it’s equally important to consider what will happen to your business and family in the event of your passing. By proactively addressing the future, you can ensure the smooth transition of your business and provide financial security for your loved ones. Here are some steps that you can take to protect your small business.
Start a Comprehensive Estate Plan
The first step in estate planning for small business owners is to establish a comprehensive estate plan. This plan should encompass a will, a power of attorney, and a healthcare agent. Here is a link to one of our previous blogs that explains the roles of a Power of Attorney to better understand your designated agent’s roles https://www.windroselawcenter.com/blog/2023/03/what-is-a-power-of-attorney/
It’s crucial to work with an experienced estate planning attorney who understands the intricacies of small business ownership to ensure your plan aligns with your unique circumstances and goals. At Windrose Law Center, we offer comprehensive estate plan packages, and can offer your business sound and effective advice.
Appoint a Successor to Your Businesses
Whether it’s a family member, a trusted employee, or an outside party, choosing someone as your successor is essential. How do you pick that person? Choose someone who understands your business and shares your vision. Then, you will also need to discuss your intentions and provide them with the necessary information to make it as easy as possible at the appropriate time. Of course you will also need to make it legal through a comprehensive business succession plan.
What Do You Do If You Have Business Partners?
Another part of estate planning when you are a business owner is to establish a buy-sell agreement if you have partners. Your partners need to be aware of your successor, and there needs to be discussion of how your successor might work with the current partnership. A buy-sell agreements the procedure for the sale or transfer of a partner’s interest in the business upon death or incapacity.
Protect Your Business with a Trust
Establishing a trust can help protect your business assets and ensure their smooth transfer to your chosen beneficiaries. Making your business part of your trust may also help minimize taxes. A trust also provides privacy because it does not become part of the public record like a will does, and a trust avoids the probate process which can be costly both in time and in money. A trust can help facilitate transfer of your business’s assets and ownership and allow your business to continue running smoothly after your death or incapacitation.
Plan for Business Continuity & Update Your Estate Plan Regularly
Consider developing a business continuity plan to address unforeseen events, such as your temporary incapacitation or extended absence due to illness. This plan should outline how your business will operate in your absence and identify individuals who can step in to manage critical operations. It’s also advisable to maintain a thorough record of key contacts, account information, and operational procedures that can guide your successors during a transition period.
Your estate plan should also be updated regularly if you have a business. As your life changes and the economy ebbs and flows, you may want or need to update your successor, business continuity, power of attorneys, and other important business documents.
Having a trusted and experienced estate planning attorney that understands your business needs is vital for the success of your business as well as its longevity. Contact Windrose Law Center today to learn more about what your business needs and how we can help you protect your business.