Many small business owners concentrate on the day to day operations of their businesses. They may be forward thinking and planners when it comes to marketing and supply chain, but not too many think about the future of their business if something should happen to them. What can you do to protect this organization you have worked so hard to build? How will you continue its success AFTER you have gone. What will be your legacy? Here are five ways Estate Planning can help your business:
Making Sure Your Brand Lasts
You’ve spent years building your brand, and you want that brand to last well beyond your lifetime as part of your legacy and possibly to assist/support your heirs. Estate planning allows your business to transition to the next generation – with growth and important business verticals in place. This brand that you have built will continue to grow and flourish with a proper estate plan in place that maybe creates a management team to carry on your vision and operations after you are gone.
Simplify Multiple Owner Businesses
If your business has multiple owners, estate planning allows you to include the option of a buy-sell agreement. This allows other owners to automatically purchase the deceased owner’s interest in the company. A buy-sell agreement also prevents children, spouses and other family members of the deceased owner from unintentionally becoming owners.
Reduce the Tax Burden
Estate taxes can put financial pressure on a business. Proper estate planning can help minimize taxes. A professional estate planner can help explain different ways to reduce taxes as a business owner, including a grantor retained annuity trust or a family limited liability company or a family limited partnership. Depending on your situation a good planner will know what solutions will work best for your situation.
Plan for the Future
Creating plan for succession will also minimize taxes, help avoid probate and allow more control over how the business is run long after the principal is gone. A good succession plan can take time to effect so starting as soon as possible is a very good idea. Your succession plan should address the transfer of the management of the business as well as delegation of authority and responsibility to successors; development, support and training of successors; strategies to retain key employees and more.
As mentioned, it is never too soon to meet with an estate planning attorney and ensure your vision for your company’s future after you have gone. This is especially important for smaller businesses whose owners are the company. Make sure you have a plan to move forward and continue to scale your business toward success.