If you own a business, you have to consider your company’s future after you retire or die. A comprehensive estate plan can address these concerns and fulfill your wishes for your life’s work.
Review these considerations when planning your estate as a business owner.
Create a will
This document establishes not only the fate of your personal property but also of your business assets and debts. Just as you would name an executor to manage your personal affairs after you die, you can also name a business executor to guide your company through this transition.
Think about taxes
The size of your estate influences the property tax burden for your beneficiaries. If your business increases in value after you plan your estate, they could lose a significant amount of money to the IRS. To avoid this issue, consider projected business growth and tax reduction strategies when planning your estate.
Talk about succession
You may dream about your children taking over your business one day, but whether they actually want to do so is another matter. Have this conversation early and often to make sure everyone is on the same page. This also allows you to think about how to divide assets among multiple children if one will succeed you in your company while the others are not interested.
If you will not be passing the business to a family member, your estate plan should make other provisions for succession. This may include closing the business completely, selling your shares to a partner or selling the business to an outside buyer.