- posted: Jul. 11, 2022
When you think of probate, you probably think about establishing a will or trust to leave important assets to your loved one, like the family home. But what about the family business? If something happens to you, who will run the business and handle the daily operations such as payroll and client services? Other important matters may need to be discussed, such as pending debts that must be paid to creditors. When a business owner dies unexpectedly, it can create a complexity of problems for those left behind.
Additionally, probate can take months to resolve, leaving your company vulnerable and entangled in litigation. Having an estate plan for your business can give you peace of mind and protect what you have dedicated your life to building. Below we discuss some benefits of estate planning for business.
Benefits of a Business Estate Plan
The primary benefit of setting up a business estate plan is that your wishes will be clearly defined and executed after your death. Having built a business ourselves, we understand the hard work and dedication of building a business from the ground up. We will help you define clear parameters for protecting and distributing your assets. Other benefits include:
You skip the legal court litigation that comes with probate. Setting up a will allows for a quick transfer after death.
A clear outline of beneficiaries and distribution of assets
Titles, deeds, etc., are organized and prepared for transfer to beneficiaries.
With an “Estate Trust,”— you may manage your assets while alive, and upon your death, the trustee can distribute them to your beneficiaries. All assets placed in the trust will not have to go through probate.
Gather & Organize Important Documents
Estate planning goes beyond legal documents. To ensure a successful transition, you will also need to establish who will assume the many roles within the company and ensure they are trained and ready to step into that role. To create a successful business estate plan, you will need to;
Collect important documents such as bank accounts, investment accounts, insurance policies, real estate titles, etc.
Determine beneficiaries (Title to properties)
List roles and responsibilities within the company and determine who will assume them. Examples: payroll, taxes, operations, etc. If you are the primary administrator, having a written policy and procedure manual may be beneficial to define each role and how to fulfill the responsibilities required for each position.
Appoint an Executor for Your Business Decisions
One of the first things to establish would be who your ‘executor’ or ‘financial power of attorney’ should be. A financial power of attorney is a document that grants a trusted person authority to act on behalf of the principal in financial matters. It is important to designate someone you trust, as they play an essential role when carrying out your wishes.
Update Your Business Estate Plan Annually
Once you have estate planning in place, you will need to update it regularly if you have new life events, such as buying new properties or welcoming a new business partner. Life happens, and you should incorporate significant business changes into your estate plan. It is best practice to review your business estate plan annually, perhaps around tax season when you are already pulling together your financial data and reviewing other relevant documents.
Schedule a Consultation with Every & Stack: Estate Planning Attorneys
We understand the value every company brings to our community, and we are committed to helping keep local businesses open and running smoothly. At Every & Stack, we work with you to ensure everything in your business estate plan is in order. A comprehensive legal plan can protect your business and your wishes upon death. Call for a free initial consultation at 386-255-1925, or contact us online to schedule a consultation at our Daytona Beach office.
