Business owners need an estate plan
An estate plan is important for a parent, business owner, or anyone with assets and sentimental property they want to pass on to their family or friends after they die. Business owners should also have a plan which addresses issues such as business continuity.
An estate plan is a comprehensive plan addressing who will receive your assets after you die. Assets typically include your real and personal property, bank accounts, business dealings and anything with value.
It is important to engage in estate planning early because unexpected illnesses and accidents can take place at any time. A well-developed plan helps alleviate complications uncertainty and stress for your family. The plan can also keep business and personal assets from probate which can reduce cost, time, and aggravation for your heirs.
Financial power of attorney
Business owners should have a financial power of attorney. This is an important document that appoints a trusted person to handle your finances after you die, become incapacitated or can no longer make decisions. It is important to appoint a qualified individual who can become familiar with your business finances.
Business owners may also develop a succession plan to assure a smooth transition of operations, management and ownership to partners, family members or successor owners. A succession plan can help assure shareholders and other stakeholders with a commercial relationship with your business that there will be a smooth transition if you die or become incapacitated.
A living trust is created by business owners when they are of sound legal mind to assure that there will be assets to keep your business in operation and supervised by people you trust. This legal document contains directions on your assets that are held in the trust and appoints a person or legal entity that you choose as the trustee. It should be updated periodically because your assets may change as your business increases.
A living trust is important for sole proprietorships because there is no separation between their owner and the business. This means that the business may not be left to anyone within the owner’s trust because the owner is the business. Assets should be listed in the living trust to protect them.