Do you run a business and want to pass it on to your family? Perhaps it’s been in the family for generations and you want it to stay that way. Or, maybe it was your dream to start a business and one day it’ll be your child’s dream.
One of the problems with keeping a business family-owned for several generations is that many owners don’t plan far enough in the future. These business owners don’t realize just how important it is to include their business into their estate plans. When owners don’t take the right steps to secure their business, the wrong people can get their hands on something great only to make it fail.
If you’re planning for the future of your business, then this is what you should know:
Asking the right questions to protect your business
There are a lot of decisions to make when estate planning and your business may not be on the top of the priority list – but maybe it should. When working out how your business fits into your estate plan, you may need to ask the right questions.
You may need to consider the following:
- Who’s best to take over the business when you die? Maybe you want your child, business partner or qualified employee to take it over.
- What if your family doesn’t want the business? You may need to consider what would happen if no one takes on the business’ legacy.
- What would happen to the business if you can’t run it anymore? You could have someone step in to run your business through a power of attorney.
Once you have a better idea of where your business will go after you, you’ll likely need to take the next steps to prepare the legal documents. Your succession plan may need to identify the next owner through a will or trust (a trust could reduce or eliminate taxes) and outline the steps to take on the responsibilities of the business.
Naming a successor for your business can be tricky, especially if you co-own it. There may be conditions in your business partnership agreement that state how a business is treated after an owner dies. You may need to know your legal options when putting your business into your estate plans.