Estate planning can be more complicated when you own a business. In addition to having a plan for your personal assets, your estate plan determines what happens to your business after you pass away.
For example, you must decide if you would like to sell your business or pass it down to a family member. You must have a succession plan ready and consider tax implications.
Here are some basic steps that can help you create an estate plan for your business.
Start by creating a detailed inventory of all your assets. This includes tangible assets such as real estate and intangible assets such as intellectual property.
When doing this, determine an overall value for your business. This is important for accurate estate planning.
Succession planning
Next, craft a succession plan. This involves selecting potential successors and training them in their role of running the business. A good succession plan ensures the stability of your business.
Create a business continuity plan to go along with your succession plan. This is a plan that lays out how your business operations will continue to run in your absence.
A business continuity plan should specify who is responsible for making key decisions and how asset ownership will be transferred. A solid business continuity plan can give you peace of mind knowing your business will continue operating smoothly.
A will is a common piece of any estate plan. Have a will and update it regularly. Make sure it includes instructions for both your personal and business assets and interests. Ensure the terms are clear between personal and business assets and distributions to avoid complications and disputes.
Review tax strategies
Do not overlook taxes. Estate taxes can substantially impact the value of your overall estate. Develop a plan to reduce or minimize estate taxes.
Finally, communicate your intentions to your key stakeholders and family members and consider using professionals to help with drafting the estate plan.