Are you a business owner? Have you ever heard an entrepreneur tell you that a business is his or her “baby?” Given the amount of time, energy, and money poured into entrepreneurial endeavors, this may sound reasonable. Business owners, however, often keep an eye on estate planning for their children but neglect to do so for their business. It can be tough to think about what will happen to your business if something should happen to you. It is a good idea, however, to do so now, to help ensure continuity in leadership and continued success for your business moving forward well into the future.
Planning for the success of your business involves planning for different situations, such as a succession in leadership. There can be two key elements to this area of business estate planning. The first is to plan for the possibility of your temporary incapacitation, and the second is to plan for what will happen when you ultimately pass away.
As to the first element, executing a durable power of attorney can help ensure that you have a fiduciary agent able to act on your behalf if you are incapacitated. It can be much better to make that choice now, rather than for there to be an argument over who should fill this role, or for your business to be permanently harmed because nobody has the ability to act. Choosing an agent can provide for business continuity if you are incapacitated and ensure the business is there for you to return to when you recover. It is also wise to choose one or more successors in the event that your first choice is unable to take over.
When it comes to a long-term business succession plan, it may well be that your choice for power of attorney is also your choice to take over the business in the event of your death. Again, it is important to choose one or more successors, particularly if your first choice is around the same age as you.
In addition to choosing the right future leadership, it may be a good idea to create a trust for your business. By transferring your business to a trust, it can avoid going through the probate process and help ensure that your business assets stay with the business rather than getting mixed up with your personal assets. You can nominate your choice of agent under a durable power of attorney to also be your successor trustee, which should make for a smoother transition. You also may be able to use certain business tax planning strategies when you put your business into a trust.
An experienced estate planning attorney can help you ensure you can reach the goals you want for yourself and your business as a business owner. For more information, contact our office today.