The day-to-day tasks of running a business are all-consuming. You are constantly preoccupied with important business matters in addition to your family life. You may not have stopped to think about estate planning. If you have not taken the steps to create an estate plan, you are making a mistake.
Estate planning is crucial for business owners. A legally sound plan can protect the future of your business as well as address your family's financial needs. If you are a business owner who needs to plan their estate, these are a few simple but important considerations.
Create your will
One of the most important documents in an estate plan, a will addresses how to distribute your assets and property in the event if you die. No one likes to think about their death, but creating a will in advance can save your family stress in the future. In your will, stipulate how you wish your business holdings and other assets be distributed among your partners and relatives.
Consider a succession plan
Do you know who would handle your company if you were to die or become incapacitated? You need to create a succession plan to address this scenario. These plans ensure that your business continues its success in the hands of competent people after you are gone.
Designate a Power of Attorney
Say that you suffer an accident or an illness that leaves you unable to make decisions for yourself. Who will make them for you? When you designate a Power of Attorney, you name someone-a spouse, a lawyer, a family member-whom you trust to make financial, legal and business decisions on your behalf.
Minimize the taxes you'll pay
Taxes can eat up a large chunk of your estate. Fortunately, there are ways to avoid or minimize estate taxes. One of the best is to establish certain trusts. These trusts, such as AB trusts, living revocable trusts and charitable trusts, can protect your assets from going to the IRS.
Consider the legal implications
If you pass away intestate-that is, without a will-then your descendants may inherit far more than your assets and property. They may inherit a legal nightmare of bureaucracy, probate and expensive disputes. An estate plan can prevent this. You can take the initiative to protect your family and your company from legal headaches following your death.