You’ve spent your whole life working to build your small business to your liking. You have invested money, time and effort into the venture, working tirelessly to ensure that it succeeds. But do you know what would happen to your business if you suddenly died? That’s an important consideration for all small-business owners to ponder.
Estate planning experts say that many small-business owners just assume that their next of kin or business partner will take over the operation. Without careful planning, though, the business could end up in probate litigation, virtually guaranteeing that the business will be torn apart by parties with varying interests.
Small-business owners should carefully consider their vision for the future of the business. If it is the type of business that can easily be passed to a family member, actions will be different than if you intend to leave it to your partner. Also, the business might shut down entirely if the proprietor dies.
Even during well-planned estate execution, hiccups can cause a small business to lose money. That’s why it’s critical for owners to ensure that the organization is properly handed down, both to guarantee continuity of business and to appropriately distribute assets to family members.
Many small-business owners also worry about their employees, and so they create a business transition plan to help those people keep their jobs.
Remember when you are creating your estate plan to include term-life insurance provisions and a living trust to determine what will happen to business assets when you die. Nothing will end up in probate if a living trust is created, according to the National Federation of Independent Business.
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