Business owners neglect integrating their company’s well-being into their estate plan for the same reason people neglect estate planning generally: they (think they) simply don’t have the time. If meeting next month’s payroll or hitting key performance indicators is keeping you up at night, it is understandable that planning for your eventual passing or potential incapacitation takes second place in priority. The thing is, estate planning for business owners, just like estate planning in general, does a lot more than protect against catastrophe—and even if it didn’t, the last 18 months have proven that protecting against catastrophe is pretty important.
What Can an Estate Plan Do for Your Business?
An often overlooked but crucial aspect of estate planning for business owners is the implementation of a business succession plan. Such a plan is not just about naming a successor—a complicated task in its own right—but involves multiple strategic steps that ensure all of the hard work you have invested in your enterprise does not vaporize the moment you hand over the reins. These steps are as follows:
1. Convene a series of conversations between existing employees, family members, and stakeholders such that competing priorities don’t provoke conflict down the road. Ensure that all involved parties have time to share their aims, wishes, and perspective. Provide space for processing and revision.
2. Draft a strategy for developing new leadership. Articulate key qualities and initiate a program aimed at their cultivation.
3. Identify future leaders and engage them in the conversation. Countless businesses have failed to survive a generational handover because the person expected to take over the company wasn’t interested in doing so. Don’t let this happen by ensuring those being groomed know it and have a say in the matter.
4. Bring succession needs in line with business objectives. This means opening up communication channels between those working toward long-term survival and those working toward present business success.
5. Determine how ownership will be transferred and how assets will be divided between heirs. Draft a clear timeline, address interested parties early on, and ensure your succession goals line up with your general estate planning objectives.
A solid succession plan not only ensures business as usual continues after you’re gone but also protects against unforeseen tragedy. When the mechanics are in place to groom future leaders, train needed talent, and eventually pass the enterprise on to heirs, little is left to chance should the unthinkable happen. Naturally, essential documents such as a Will, trust, financial power of attorney, and healthcare directive also play a role in estate planning for business owners but these are easy to execute with the help of an experienced estate planning attorney.
To learn more about investing your business with resilience or to ask any questions about estate planning for business owners, do not hesitate to reach out to the Deliberato Law Center today either by calling our office at (216) 341-3413 or using the contact form on our website.
Contact the Estate Planning Attorneys at Deliberato Law Center