Opening a small business is a great venture for some individuals. Ensuring that the company is taken care of if something happens to you can protect the employees, as well as your family members who count on the income.
Consider these five components when you’re setting up your estate plan to protect your company.
Create a will
A will outlines how you want your assets, including your business interests, to be distributed after your death. Without a will, state intestacy laws, which may not align with your wishes, will dictate the distribution of your assets.
Establish a trust
Setting up a trust can help protect your business assets and provide more control over their distribution. A trust allows you to transfer business assets to your chosen beneficiaries while minimizing estate taxes and avoiding the probate process.
A buy-sell agreement is a legally binding contract between co-owners of a business that outlines how each owner’s interest will be transferred upon death, disability or retirement. This agreement can help ensure the continuity of the business, provide a predetermined valuation method and prevent conflicts among surviving owners and heirs.
Develop a succession plan that identifies potential successors, outlines the transfer of management responsibilities and provides a timeline for the transition. A well-prepared succession plan can help minimize disruptions to the business and ensure its continued success after your departure.
Power of attorney
Designate a trusted individual to have financial and legal decision-making authority on your behalf in the event you become incapacitated. This can help ensure the continuity of your business operations and protect your assets during times of incapacity.
Making sure you have a comprehensive estate plan is critical to ensure your loved ones and your business are taken care of. Ideally, you should work with someone who can help you to set things up so they meet your goals.