As a business owner, you are already likely accustomed to having your decisions carry a lot of weight. The choices that you make regarding the company’s future or an upcoming project could affect the company’s finances and the job stability of your employees. You need to plan ahead and keep a focus on the big picture when handling any decisions related to the company.
Business operations aren’t the only area of life in which your responsibilities will require careful consideration. Estate planning will be different for you as well because of the business that you own and operate. Unless you have already taken steps to plan for the business’s future, the company you own will demand a lot of attention during the estate planning process.
What two special considerations will you typically need to address when you own a business and want to plan your estate?
-
Who will take over the company?
Any successful business can potentially transition to a new generation of leadership when the person who currently owns the company or who founded it retires or dies. The sooner you begin business succession planning and create instructions for selecting or training your replacement, the easier it would be for your business to survive the move from your ownership and leadership to someone else’s.
-
Transferring ownership of the business
The leadership role isn’t the only consideration that you will need to address. You also need to think about the actual ownership of the company itself. Perhaps you would like each of your children to have an equal ownership interest in the business, or maybe you want one party to inherit it.
You might even decide to transfer ownership into a trust so that your guidance will continue to influence business operations for the foreseeable future. For businesses worth millions of dollars, a trust can be helpful for the reduction of estate tax liabilities as well. The sooner you start thinking about what will happen to your business when you retire or pass on, the more stable the company will be regardless of what the future brings.
Addressing your ownership interests and authority related to a business will be a crucial part of the estate planning process as a business owner.