You have worked hard and built a successful business. Congratulations! But do you have a succession plan in place if something happens to you?
Estate planning offers a range of tools that you use to secure your succession plan. Through your estate plan, you can articulate what you would want to happen to your business upon your death. This way, you will relieve your loved ones of tough decisions and, most importantly, shield your business from a costly probate process.
Here are three ways you can incorporate your business into your estate plan:
Set up a trust
A living trust is a crucial tool for most entrepreneurs. Done right, a living trust can act as a separate entity that oversees your company’s day-to-day affairs while allowing you to specify what happens to your business when you die.
Unlike a will, a living trust does not go through probate. As such, it saves time and, thus, ensures a smooth and fast transfer of the business to your heirs when your die. It also offers privacy and minimizes legal expenses that are associated with the transition.
Include buy-sell agreements
If you are in a partnership, or if you have multiple beneficiaries, you can consider including a buy-sell agreement in your estate plan. This provision stipulates that, upon your death, your partners can (or must) buy your shares. And, if you have multiple beneficiaries, the buy-sell provision will allow interested beneficiaries to buy out those who want to liquidate their shares.
Create a plan
A well-structured succession plan can outline the running of your business in your absence and help your heirs transition ownership of the business. It can also provide direction should your heirs want to sell the business.
A thoughtfully-created estate plan can protect your legacy and preserve the business you have worked hard to build. Find out how you can create an estate plan that takes your business interests into account.