As a small business owner, you have enough on your mind already. You have to worry about your employees, clients, and customers, as well as the day-to-day details of running a successful business. When it comes to estate planning, many entrepreneurs think that this is something they can put off until later—but that’s not true.
Estate planning is an important component of any small business owner’s life: it helps you with financial security in the event of death or disability; it keeps your business continuity intact if something happens to you, and it ensures that your beneficiaries receive what they’re entitled to under law without having to go through probate court (which can be very expensive).
In this post, we’ll look at some reasons why setting up an estate plan is important for small business owners like yourself!
The Importance Of Estate Planning
If you have a business, estate planning is especially important. Your business might mean the world to you, but it is only one part of what makes up your life. Estate plans help ensure that everything else goes smoothly after your death.
While setting up an estate plan may seem like a hassle or unnecessary if you don’t have children or other dependents, it’s still worth doing even if there’s no one waiting for your money or assets when you pass away.
You can use an estate planning lawyer to help organize all of your assets and liabilities in case something happens to them while they’re under your care; this way, someone else won’t be responsible for sorting them out later on down the line simply because they don’t know how much money was put into each account or where any investments were stored within them (or elsewhere).
Executing An Estate Plan
If you have any employees who work for you, you need to put together an estate plan. You’ll need to appoint a trustee, executor, and personal representative of your estate.
A trustee is responsible for managing your assets during your lifetime, while the personal representative will be in charge of distributing those assets after your death.
The executor is usually named by the personal representative because they’re usually close friends or family members who are knowledgeable about how best to do so.
In some cases, however, it may be necessary for someone else on staff (like an accountant) to step up and help out when it comes time to distribute property after death—and this person can also serve as an alternate executor should anything happen to the primary one.
Professional firms will bring things that are important, to your attention, so you don’t need to worry about anything. They are not authorized to make any changes on their own, but they will give you the best possible options, given the state of your business. Their estate planning assistance for your small business is something you really don’t want to miss out on.
If you are feeling overwhelmed with all of this work, then you should hire a firm that will help you sort through everything. One great example is Easler Law. This firm specializes in wills, trusts, and estate planning. Yes, this is one of their specialties, and they are one of the best out there too. They have worked with families, business owners, and dozens of people so that they can protect their assets in the event of their death.
What Happens Without Estate Planning
If you don’t have an estate plan, your business may not be able to continue after your death. Your business continuity will be affected if you die without establishing an appropriate estate plan.
If you pass away without having a valid will or trust, the laws of intestacy will dictate how your assets are distributed among your heirs.
If this happens, the shares they receive could be significantly smaller than they would have received under other circumstances. For example:
- A child who takes over management of the family business may decide to sell it; in that case, his share of inheritance would likely be much smaller than what he would have received if he were given complete control over its operations during his lifetime (and had therefore been able to choose how best to utilize its resources).
- The main beneficiary named by a deceased individual’s estate plan might not want or need all of their inheritance immediately upon receiving it—but if he/she dies and doesn’t leave adequate instructions for distribution before passing away himself/herself, then no one else knows what should happen next!
As it can be clearly seen, estate planning is crucial to ensure the prosperity of a business. In layman’s terms, it will break away and will have to declare bankruptcy due to the fact that there was no backup plan in case the CEO passed away or got ill to the point that they could not conduct the daily affairs of said business.
The Issue Of Unintended Beneficiaries
If you’re a small business owner, it’s important that your beneficiaries have the right skills and experience to run your company after you die.
If they don’t have these skills, they’ll inherit more than just a pile of cash and other property: they will also inherit all of the problems associated with running your business and managing its assets.
They won’t be able to cope with it, and the first thought is that people in their shoes will have to sell off what they inherited, even if it is for a fraction of the cost.
This was just one example of unintended beneficiaries. There could be co-partners that may have different ideas of how to run the business. If they own the majority of the shares, they may restructure completely, which greatly increases the risk of the business flopping.
These unintended beneficiaries will result in a net loss for the business, which can create instability and can be a real threat to it.
Importance Of Keeping Your Estate Plan Updated
It’s important to keep your estate plan updated as your life and business circumstances change over time. Your business is a living entity, just like you. It grows from infancy into adulthood, matures, ages, and eventually dies.
As it does so, its needs will change—as will yours. So, it’s vital that you keep your estate plan up to date with these changes in order for both of you to be prepared for whatever the future may bring.
Establishing an estate plan is a crucial part of any small business owner’s life. It’s important to have a plan that ensures your wishes will be carried out and your family will be taken care of in the event that something happens to you.
If you don’t have one already, now is the time! Life is unpredictable, and it is never too late to make the right decision.
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