Estate planning protects the people you love. A good estate plan will ensure that you decide who gets to keep your property when you die. It will also protect you if you become ill or get injured in an unexpected accident.
If you are a business owner, your estate plan should also consider your employees and the company itself. Particularly if your position is crucial to the function of the company, you may have to have plans in place or risk the company’s failure if you wind up incapacitated or you die.
Your business is probably one of the most important parts of your legacy and something you would like to pass on to others. There are certain steps you need to take when estate planning as a business owner.
Make sure someone has legal authority to take over
Depending on how you hold your company and the scope of its operations, you might be able to transfer some ownership shares to a subordinate or family member that you trust so that they are in a position to take action right away if something happens to you.
If you are the sole owner and operator, you might create power of attorney documents that authorize a loved one to handle certain issues on your behalf, such as paying bills and issuing payroll checks when you can’t do so. Ensuring that there is someone who can legally take action after your death or incapacitation is one of the most important steps to preventing the downfall of your company.
You need to provide training or information on your role in the business
If you want someone to be able to step into your role at the company, they will need access to all of the information you probably have in your head about your daily, weekly and even quarterly obligations. Everything from your to-do list to your account logins and banking institutions needs to be collected into one cohesive document, often called a succession plan.
A succession plan helps give critical information to someone who will do your job after you. Anything that only you know should be included in the succession plan to ensure that other people will be able to fulfill those responsibilities.
Whether you have already created an estate plan and need to modify it to include your business or you are just beginning to think about it now, taking action soon will give you peace of mind and will protect the business and the people that depend on you.