Top 5 Estate Planning Gems for Business Owners
By: Cristin Gerczak, Esq.
March 2, 2021
If you’re a business owner, estate planning is more than just protecting your personal assets and the future of your family. Owning a business can be one of the greatest joys anyone can have, but it is also an extra complexity in the estate planning world that shouldn’t be ignored.
Preparing or updating an estate plan to encompass your business will help to protect your family’s and your business’s future if something were to happen to you. Here are five estate planning gems for business owners.
Business Structure
Ensure your business is operating under the correct structure. Whether that is as a limited liability company or a corporation is just the first step in the business structure planning. Another key aspect is whether the business is owned individually, by a trust, or by another entity.
Every situation is unique, and planning the best structure for you takes thought and discussion. Some structures are hard to fix if done improperly.
Planning for Incapacity
Many people think of estate planning as planning for your passing. However, there are many situations where you’re alive but lack capacity — rendering you unable to make decisions relating your personal life or business.
Ensuring that you have a durable power of attorney, designation of health care surrogate, and living will in place are important for these situations, as is the structure of the business entity.
Continuing the Business
Once a business has been established, it is important to make sure that you have the appropriate, up-to-date business documents, such as bylaws, shareholders agreement, an operating agreement, employment agreements, independent contractor agreements, customer agreements, and handbooks.
This will ensure that the business will continue to operate if you’re temporarily or permanently unable to make decisions.
Succession Planning
The typical options of succession planning are to pass the business down to family, sell the business to an interested employee or partner, sell the business to an outside third party, or close it down. Whichever option is right for you will require planning — and back-up planning.
If you want to keep the business going, it’s important to ensure that you have a succession plan in place in case of disability or death. That relates to the people, process, and product/service, as well as management and financing the transition. Nothing will endanger a business’s ability to survive like a lack of capital to operate.
Organizing Business Documents
Keeping important business records organized will ensure that your plan is easy to follow and supported in the event of your incapacity, death or exit, from the business. That includes files relating to legal, accounting, tax, personnel, and so on.
Estate planning may not be top of mind for many business owners, but it’s still a necessity to plan for the unexpected. Starting with these five gems for business owners gives you a head start on what you need to start thinking about when you’re looking for the right legal professional to assist.
Author:
Cristin Gerczak, Esq.
Haimo Law
Strategic Planning With Purpose®
Email: cgerczak@haimolaw.com
YouTube: http://www.youtube.com/user/haimolawtv
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