Estate planning is even more essential for business owners. In fact, your business insurance might even require that you have some sort of plan in place to ensure that your business can continue even if you are gone. And by putting your affairs in order you can best protect both your family and your business.
Business Succession Planning
Think about what could happen if you don’t have a will. Just like your personal assets, your business assets will most likely pass to the next-of-kin. This might not be a big issue if your beneficiary is knowledgeable about the business. But what if he or she doesn’t know anything about running your business? This could lead to many problems with stakeholders and employees. Don’t leave your business in an ambiguous state. Make sure you specify, legally, just exactly who you want to take the helm if something happens to you.
What can you do?
We’ll talk about a couple of important techniques here but, as always, the easiest and safest thing you can do is to contact an experienced estate planner to lead you through the process.
As a business owner, one of the most powerful tools you can use is a buy-sell agreement. This type of agreement controls how ownership is transferred in the event that you become unable to run your business for any reason. This type of instrument is a legally binding agreement used to reallocate a share of a business if an owner dies or leaves the business. Using such an agreement you can also allocate portions of the business to more than one person.
If you want your heirs to have money but not control the business, you should look into purchasing buy-sell insurance. In essence, this provides the money and a framework for your business partners to buy out your share of the company’s net worth from your heirs thus providing for smoother business continuity.
It’s also important that you create a written succession plan. In this plan, you will designate a successor, recommend if the business should be sold, specify exactly what the business owns and what it owes, and provide a detailed list of accounts.
How can you make sure the right information will pass to the right people?
AfterVault makes this really easy. You can add one additional vault in your account, specially focused on your business needs. With only one click you can invite your business guardian. All the information you put into your vaults is well organized, highly secure, and available to you 24/7 from everywhere in the world. So if you go on a business trip to the other side of the world you can still upload, alter, or access your documents.
In your estate plan make sure you specify which assets belong to the family and which are business assets. This could save your family a lot of problems if the business’ creditors try to seek money from family assets to cover business debts.