Does your estate plan include your small business? All too often, when a business owner dies, their spouse and children must make difficult decisions about the future of the business. Without a will or succession plan, you may put your family’s finances, your business partners, and even your clients at risk.
What happens to a business without a will or succession plan?
A large business typically has a specific power structure with clear expectations and relative ease to replace employees when they leave. A small business is very different. Owners sometimes wear so many hats that the business cannot effectively survive without them.
Without a will or a succession plan, the following may happen:
- Your heirs might stay locked out of your businesses’ social media, email, copyright status, etc., leaving its reputation vulnerable to missed deadlines and unfulfilled obligations,
- Your heirs might need access to your personal financial information to settle business debts with creditors and lenders.
- Your heirs and your business partners may need to go to court to settle financial or business disputes.
- The person who takes over the business may not be the person you wish. They may lack the qualifications or business sense necessary to keep the business profitable.
- Your employees may express doubts about new ownership or leave to protect their financial security.
It could take years for your business to get back on track without a will or succession plan in place. Under the best circumstances, your clients, lenders, and business partners will patiently wait on and work with your heirs as they develop a plan and work together to get your estate straightened out. Under the worst, your heirs cannot agree on a plan of action for your estate and business, leaving your business, its clients, lenders, and business partners open to financial trouble. As a result, your heirs may inherit less than you intended.
If you own a small business, it is important to know your legal options to make an informed choice on the succession of ownership. Your will could mean the difference between thriving or closing your doors.