When you own a small business, planning your estate is usually going to be a bit more complicated than it is for people who are not in business for themselves, and there are a number or reasons for this. First and foremost, you have to decide what you would like to do with the business after you pass on. If you want to keep the business in the family, you are going to have to choose a successor and devise a succession plan. Another factor to consider is that when you are building a multi-generational business, you are likely to devote significant assets to it that might otherwise be liquidated upon your passing. This is fine for the heir or heirs who are assuming ownership of the business, but most people will want to make provisions for the rest of the family as well. There are a number of ways this can be done, but it is indeed another thing that a small business owner has to consider when planning his or her estate.
If you decide that you want to put the business up for sale at some point rather leaving it to an heir, you will undoubtedly approach potential investments into the business differently. This is one of the reasons why it is important to consider your options and work up an estate plan sooner rather than later. Your future intentions will be very relevant when you are making business decisions along the way.
Even if your business is owner-dependent and it will no longer exist after your death, you need to make future liability mitigation a part of your estate plan. You will also have to liquidate equipment and perhaps real property, and all of this takes intelligent planning.
The primary objective of estate planning in general is to maximize the value of your assets and pass them along according to your wishes, and estate planning for small business owners is no different. But what is different is the fact that what you want to do with the business in the future impacts your decision making along the way. Long term planning is key, but this is should come as no surprise to any successful small business owner.
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- How Do I Trust Thee…Part I - July 7, 2022
