As a small business owner, you may not have considered working your enterprise into your estate planning process. In fact, you may not have hired an attorney to come up with an estate plan at all. However, no matter the size of your company, it’s worth thinking about what will happen to your hard work once you retire or pass away. Here’s a closer look at the benefits of working a business succession plan into the estate planning process.

What Are the Benefits?

By creating a succession plan, you can determine which individuals or group of individuals will obtain control of your enterprise after you. Whether this shift occurs when you decide to retire in 10 years or when you pass away in 35 is entirely up to you. 

It offers you peace of mind knowing that your business will be in responsible hands, and that the transition in leadership will go as smoothly as possible. If you’d prefer to sell or liquidate your company, your succession plan can stipulate the terms of the sale and ensure you or your beneficiaries receive the maximum payout. 

What Should It Include?

The ideal business succession plan will focus on a specific trajectory for the company—such as passing ownership to a family member, or liquidating the company and giving the profits to your beneficiaries. If you choose to keep the company going after you retire or pass away, the succession plan should identify key employees who should continue in their roles or advance to superior ones. 

It should also include your top choices for individuals to assume your role, as well as some backup choices if they are not available or willing. If you are planning to sell the business, your succession plan should include a business valuation, which is essentially a fair estimate of its purchase price.

How Can I Minimize Taxes & Avoid Probate?

When you pass away, all of the assets mentioned in your will or in your possession must pass through the probate process. This can take weeks, months, or even years, during which your personal and business assets become part of the public record, and your beneficiaries can contest the terms of your will. 

That’s why it’s important to put your business into a trust, such as a Grantor Retained Annuity Trust (GRUT). If your business grows in value between the time you create the succession plan and the time you pass away, this growth will be excluded from your taxable estate. Plus, items placed in trusts are excluded from the probate process, which keeps the details private and transfers assets directly to the beneficiaries, without long wait times.

There are countless ways to organize your succession plan, and Sippel Law Firm PLLC is here to help you choose the best way for your small business. This Kingman, AZ, attorney is happy to help entrepreneurs face their future with confidence, by completing an estate plan that includes their business. They have over 35 years of experience practicing law, from real estate to bankruptcy cases. To learn more about their practice areas, visit the website. You can also call (928) 753-2889 to schedule a consultation with an estate planning attorney.