The estate planning process can be difficult to navigate, especially for those who own a small business. While you might want to simply hand it down to the next generation, there are certain precautions that have to be in place. Otherwise, you risk losing money on the investment. Here’s a closer look at the basics of business succession plans and how to determine the best approach. 

What Are the Benefits? 

Creating a business success plan will produce an instant peace of mind. Not only does it ensure that the required documentation is on file, but it also increases the ease of the transition. This outlines the details of how you’re going to phase out of the company, the process for introducing the new owner to the investors and providing a chance to familiarize themselves with the current operations. 

Business success plans also offer a sense of stability, allowing you to maintain a certain lifestyle during retirement and identifying how different employees will retain their roles after the transition. It provides guidelines on how to handle unexpected events and could even designate responsibilities to other family members. 

What Should It Include? 

You should include a list of short- and long-term goals for the company. This is the easiest way to ensure that the next owner continues to support the dream and keeps operations going in the right direction. 

If there’s more than one person in line for the job, then construct a list of their strengths and weaknesses. Put the ones you prefer at the top and, if they become unavailable, then the executor can simply move on down the list. 

How Can You Minimize Taxes and Avoid Probate? 

The easiest way to minimize taxes and avoid probate is to establish an irrevocable life insurance trust (ILIT). It presents a way to perform the transition without requiring the business to go through probate. This account also offers a level of liquidity that covers any estate taxes and other fees that the family might incur during the process. 

If you’re in the market for small business services, reach out to Spangler Estate Planning in Greensboro, NC. They have nearly 50 years of estate planning experience and are well-versed in the intricacies of small business law. Their team is skilled at upholding the rights of their clients and will ensure that your wishes are kept on file. Call (336) 252-1033 to schedule an appointment or visit their website for additional information on their estate planning expertise.