Owning your own business comes with a lot of responsibilities. You work hard to keep it running and make it a success. You have to make important decisions every day and keep relationships with your suppliers and customers strong. Yet, one thing you may overlook on your long daily to-do list is to create an estate plan with your business in mind.
For business owners, you want to ensure your business will survive if you suddenly pass away or become incapacitated because of a sudden injury or illness. To do that, you need to have a comprehensive estate plan that includes business succession planning. As part of a business succession plan, you will need to think about who could take over your business. Will it be a business partner or co-owner? An employee? A family member? An outside party? Will the business be held in trust?
A successful business succession plan will address the following questions:
- How and when someone will take over your business
- Who the successors of the business will be
- How the company will continue its operations after your death
- What the value of your business is or how the value will be determined at your death
- What will fund your business succession (life insurance proceeds, your assets, third-party assets or loans)
Keep in mind you will need to have a business valuation completed regularly to update your succession plan. You also should consult an estate planning attorney about how you can reduce the tax impact of your business succession.
Having a comprehensive estate plan in place will give you peace of mind about your business’ future. You will know you’ve taken the right steps to allow your business to continue without your presence.