Certain assets can make estate planning more complicated than it would be otherwise. If you’re a small business owner, your business itself may need to be part of this process.
It’s important to consider what your goals are and what you would like to accomplish with that plan, along with what would be best for your family and for the company itself. There’s a lot to consider here, so let’s break down some of the main key factors.
Do you need a succession plan?
First and foremost, ask yourself if what you actually need is the business succession plan. This is a plan that passes the business on to one of your heirs or to someone else that you’ve chosen. They’re going to take the business over. This is very common with small businesses, as parents pass them on to their children.
If you do need a succession plan, then you need to talk to your children about it to make sure that they want the business. You also need to think about how soon you can get this process underway. It’s generally best to bring that child in before you actually leave the business or pass away so that they can learn directly from you.
Do you need to sell the business?
If your children do not want the business, then your estate planning may be more focused around selling that business and splitting up the money that you get in the sale. This can be complicated if you want to set it up in advance but you’re not yet ready to sell the company. You may need to pick someone to make these legal decisions on your behalf. This can be done in a few different ways, such as legal power of attorney.
Once the business has been sold, then your estate plan simply has to take the proceeds from that sale and give it to the heirs that you’ve named. You may also consider putting those proceeds in a trust if you want to use the money in a more specific way.
Getting all the details right on any part of this plan is very important, so be sure you know what steps to take.