If you’ve read our free estate planning guide, you may be wondering how our advice applies to business owners. If you own a business, you must figure out what you want to happen to your business after you pass away or become incapacitated. This process requires considerable work and communication, and we’re here to help. These are some of the most common questions we get.
What should I include in my estate plan?
As a business owner, your estate plan should contain several different elements. Start by looking into:
- A living trust and/or will. These documents allow you to distribute your business to heirs, set terms for those who inherit your business, and handle other aspects of your estate. In many situations, both a trust and a will are recommended.
- Life insurance. If some heirs want to run the business and some simply want to sell their portion, life insurance is one way to fund the buyout of the business.
- Buy-sell agreements. Buy-sell agreements allow for a seamless transfer of ownership and power after your passing.
- Succession plan. A succession plan lays out important account information, financial information, management guides, and other things heirs need to know to run your business.
What happens to my business if I have co-owners?
If you co-own the business with others, you may want to decide what will happen to your share of the business upon your death. Some choose to set up buy-sell agreements that automatically sell their portion of the business to co-owners upon their death. Others choose to pass their share of the business to their spouse or children.
Do I need a succession plan?
A succession plan is essential for the future of your business. It details the systematic transfer of your business to new owners and/or managers. It should explain the training and support of successors, how responsibility should be allocated between successors and retention of key employees who will guide the business through its next stage.
Should I have a power of attorney?
Power of attorney documents are highly recommended. A financial power of attorney that goes into effect when you become incapacitated ensures that your business accounts and debts will continue to be maintained throughout your incapacitation. A healthcare power of attorney, although not necessarily relevant to the business part of your estate plan, protects your medical care preferences.
How can I be sure that my values are recognized in my business after my death?
The work you put into your estate plan, especially your succession plan, is part of preserving the values and goals that have shaped your business to this point. The rest comes down to constructive, consistent communication with your heirs. This is often the most difficult part for business owners, as family members may be reluctant to discuss the details of their loved one’s death. However, having conversations about your vision for the business, how you want it to grow, and what values you want to be represented in the business can bring you peace of mind.
I know who I want to inherit my business—how do I make that happen?
It is important to speak to an estate planning attorney about how you want your business to be distributed upon your death. This can be a fairly straightforward process if you have one heir or quite complicated if you have multiple heirs with different levels of interest in business ownership. Generally, ownership can be passed on with a combination of a living trust, will, and buy-sell agreements.
How can I make sure my business provides for future generations?
A family business that lasts multiple generations must have dedicated owners at the helm every step of the way, so again, communication is the key to having your business grow and stay successful through multiple generations. You must find out how dedicated your heirs are to your business and create a strong succession plan that puts them in a position to prepare their own heirs for ownership down the road.
Start Your Estate Plan by Contacting Gullotta Law Group Today
If you have just started your estate planning journey, the process may seem overwhelming. Attorney Eric Gullotta and Gullotta Law Group are here to help you and ensure that your estate plan reflects your goals for your business. Schedule your consultation now by calling us at 707-938-7234 or reaching out to us online.