Whether a person in Richmond is the third generation to inherit the family business, or whether they started their small business from the ground up, business ownership is a difficult but worthwhile endeavor. Business owners will naturally want to see their business grow and thrive, even after their death. Therefore, estate planning is important for those who own a small business.
Business owners may want to consider executing a will. A will can give express directions as to how the business owner wants their business handed down to the people they choose. If there is no will or any other estate planning document in place when a person dies, their business will pass to their survivors via the laws of intestate succession. If this happens, the business may not end up in the hands of the person the business owner would have chosen.
More complicated than a will, but also very valuable, is a revocable trust. A trust is a legal entity that is funded during the business owner’s lifetime using the business owner’s assets. A trust is helpful, because even if the business owner becomes incapacitated, the trustee can manage the assets in the trust. Trusts also bypass probate, which saves time, money and protects the trust beneficiaries from the business owner’s creditors.
Powers of attorney are another part of a well-rounded estate plan for business owners. This is because a business owner’s health can take a turn for the worse during their lifetime. If a business owner reaches a state in which they are not able to make decisions regarding their medical care, then their appointed health care power of attorney can make these decisions on the business owner’s behalf. A financial power of attorney works much in the same way.
Business owners who are part of a partnership may want to execute a buy-sell agreement. This document can provide direct instructions as to the transition of business ownership from the business owner to the rest of the surviving partners. Since it can be executed prior to a person’s death, this means that all partners to the business are in agreement with regards to its terms.
Owning a business is a labor of love, so it is important that the business is taken care of once the business owner dies. With a well-rounded estate plan in place, business owners can rest easy knowing that their wishes will be met.
Source: Las Cruces Sun-News, “Estate planning provides protection for business owners,” Sumer Rose-Nolen, Jan. 11, 2018