As a business owner, your company represents not only your livelihood but also a significant part of your legacy. Integrating your business into your estate planning is an important step to help better ensure a smooth transition and continued success, even after you are no longer at the helm. The following tips can help to help make this goal a reality.
Understand the value of your business
Before you can effectively plan for the future of your business, you need to understand its current value. This valuation will inform all your decisions in the estate planning process. It is generally wise to obtain a professional business valuation to determine the fair market value. It is helpful to review this valuation periodically, as businesses grow, and markets change.
Choose the right succession plan
Deciding who will take over your business is as important as deciding to start it. Consider whether a family member, a business partner, or even an employee might be the right choice to continue your legacy.
To help ensure a seamless transition, consider the following strategies:
- Create a buy-sell agreement that activates upon your retirement or death
- Consider establishing a family limited partnership if family succession is intended
These are just a few common options and each has legal and financial implications. Take the time to understand which is best suited for your business and personal circumstances.
Incorporate your business into your will and trusts
Your will and trusts are powerful tools that can help you manage not just personal assets but also your business interests. It can help to specify in your will who will inherit your business or shares in the company and use trusts to minimize estate taxes and provide for a smoother transition without the need for probate court.
Integrating your business into your estate planning is not just a wise legal move — it is a necessary step to safeguard your legacy and continuity of your life’s work. By understanding the value of your business, choosing the right succession plan, and utilizing wills and trusts, you can create a comprehensive estate plan that addresses all aspects of your business and personal assets. Although the future is unpredictable, planning for it does not have to be.