Almost every adult could benefit from the creation of an estate plan. Some people have more of an incentive than others. Those with valuable property and more complex situations may need a thorough estate plan, as their death could lead to their families fighting if they don’t plan carefully.
Business owners often need to plan for their incapacity or death to help preserve the organization that they run. They may have unique estate planning needs when compared with those who work a job at a business run by someone else. The following are some of the most important estate planning considerations for business owners.
Creating a succession plan
Business owners who suddenly die or have a medical emergency could leave their businesses vulnerable to failure. Without someone to step into their position, the company may struggle to continue operating. A succession plan helps identify individuals who can fulfill an owner’s responsibilities. It can provide important guidance for selecting and training their successor so that the transition to new leadership causes minimal disruption to business operations.
Preparing for incapacity
The possibility of a medical emergency is a serious concern for those who run businesses. A car crash that puts them in the hospital or an illness that leaves them unconscious might cause significant operational disruptions. Powers of attorney are valuable estate planning inclusions for business owners. They can authorize someone they trust to temporarily handle crucial financial matters for the business until they can get back to work.
Allocating ownership interests
A business owner has to decide who inherits their stake in the company. That may not be the same person as the individual who takes over their job responsibilities. In some cases, they may leave the business to a specific family member. Other times, they may leave it jointly to all of their children. Some people even transfer the ownership of their business to a trust. In that situation, loved ones could receive proceeds from successful business operations without having direct control over the company or the ability to sell it.
Those with high-value assets often need help establishing appropriate estate plans. Their plans can protect their assets and help to prevent their loved ones from fighting after they die. Discussing the business and family circumstances with a skilled legal team can help company owners establish plans that protect them, their loved ones and the organization they own.