Owning a business is an integral part of building a life for you and your family. As you think about creating an estate plan, your company has likely played a significant role in building the assets you intend to pass down.
Having a plan for your business when you pass away is just as important as planning for your personal assets. You and your family should have a clear understanding of what would come next for your company.
Here’s what you should consider when including your business in your estate plan.
Knowing who is next
An initial and crucial part of including your company in your estate plan is talking to loved ones about your long-term goals. While you may have planned on the business being in the family for future generations, your family may lack the skillset or interest to maintain the business after you die.
Have a candid conversation about your goals for your business’s future, then let your loved ones share their input on what they are willing to do to support those goals. If you have family members who are willing to take over the family business, take the time to teach them the details of what you do.
What about an owner-dependent business?
While an owner-dependent business has limitations for expansion, there is significant potential for succession and profitability. With so much of your estate linked to the company, it is essential to develop a plan for what will happen to your business after you die.
You should consider early on whether any of your business associates or family members are interested in carrying on or purchasing the business. Selling the company for a fair price will be a critical factor in determining your estate, so it is vital to plan ahead.