Your business does not have to die with you.
You worked hard.
You built your own business.
It took planning.
It took love.
It took persevering.
Looking back, you see success.
Looking forward, you want to leave a legacy.
How do you do this?
According to a recent grbj.com article titled “Estate planning for small businesses,” estate planning is a must.
What specifically do you need?
Having a last will gives you control over who gets your assets when you die.
Without a last will, your assets will be divided according to the laws of your state.
This includes your business.
If this is done, the business you built may be ripped apart and die with you.
A Living Trust.
A living trust is in some ways very similar to a last will.
It allows you to distribute assets held in the trust according to your wishes, however, it does so without probate.
You read that correctly.
Unlike a last will, the trust distributes assets titled to it outside of probate proceedings.
Keeping assets from probate will help keep your affairs private.
A trust can also make passing business assets more efficient for everyone involved.
A General Durable Power of Attorney (Financial).
Should you become incapacitated, you will want your business to carry on.
Having a general (i.e., broad in its authority) durable (i.e., continues to be effective when you are incapacitated) power of attorney, allows you to designate a trusted individual to act on your behalf financially.
This includes paying bills, managing finances, and even tending to business matters.
A Succession Plan.
Your business will not transfer itself.
You will need to create a plan for succession.
Who do you want to take over the business when you die?
Will it be one person or more than one?
Will it be a family member or an employee?
Will it be left as an inheritance or will it need to be purchased from you?
Do you want to sell it to a stranger?
Whatever you choose, it will require careful consideration.
A Buy-Sell Agreement.
Do you own the business with another person or other people?
A buy-sell agreement may be best.
This arranges for your ownership to be purchased by the other owner should you die or become disabled.
It expresses how to determine the value of your interest and how the money is to be paid to your family.
Without this, your interest will pass to your family.
If you do not want your family to have this responsibility later, be sure to have a buy-sell agreement now.
The right type of life insurance.
If you own a business, you really should have life insurance.
It may take some time for your business to sell.
The money can tied them over during this time.
If your family is keeping the business, the life insurance policy can help cover expenses and payroll during the transfer of leadership.
The money could also buy-out the shares of the other owners should this be the goal.
Do not attempt this alone.
Work with an experienced estate planning to ensure you have the best plan in place for your business and your loved ones.
Reference: grbj.com (Grand Rapids Business Journal) (July 19, 2019) “Estate planning for small businesses”