Mapping out what will happen to your business and the rest of your estate after you pass on can give you peace of mind. Instead of worrying about the future, you will have a concrete plan in place.
Estate planning as a business owner can involve passing the business to your heirs, creating a will or declaring powers of attorney. Use these tips to successfully create an estate plan that can take care of your business for years to come.
- Start with the core elements
The core elements of any estate plan typically include a power of attorney, health care directive and a will. Tackle these basics before tailoring your estate plan to your unique needs as a business owner.
- Draw up valid legal documents
First, create a will. Your will should explain in clear terms where your assets will go after your death. It should create a route for property transfers, including the transfer of business ownership. Next, create an advance health care directive. This legal document gives directions regarding your health and medical care if you become incapacitated. Finally, determine a power of attorney. Choose someone to have the legal authority to make business decisions for you if you can no longer make them yourself.
- Tailor your estate plan
Once you have the basics down, tailor your estate plan for your specific needs. Document the most important details of your business. Give any business partners access to accounts and information. Create a succession plan that will allow others to run your business in your absence. Assign different people to take over various duties at your company. Tie up any loose ends to ensure the responsible running of your company.
- Work with a professional
Do not attempt to create an estate plan alone. Not only can this lead to making many common mistakes, but it could also result in invalid legal documents. You might think you created a valid will, only for your heirs to have to fight for business ownership in probate after you pass.