With all the effort and time put into building a company, you don’t want its future to be in jeopardy after your passing. That’s why it’s in the best interest of small business owners to create estate plans. Below are answers to basic questions regarding estate planning for small business owners, so you can focus on the specifics of your situation with an attorney.
Answers to Questions About Estate Planning for Small Business Owners
What happens to my business if I die without a will?
Regardless of whether you own a business, dying without a will means the courts will decide how assets in the estate will be distributed. First, money in the estate will be used to pay off debts, with any funds and property leftover distributed to surviving heirs. Depending on the financial situation, the business could be sold to pay off creditors or closed for an extended period during probate.
However, with a will, beneficiaries can avoid these problems. You can name someone to inherit the business, ensuring it doesn’t end up in the wrong hands. You’ll also name an executor who will handle financial matters and day-to-day operations during the transition.
What do I need in addition to a will?
If you co-own the small business, ask your attorney to draft a buy-share agreement. This will answer the question of what will happen to your share of the company. In the agreement, you can state the selling price for your share of the business and name a person who can buy your portion.
Set up a power of attorney, too. With the document, you can appoint a person to handle business transactions on your behalf if you are incapacitated.
What if I want the business to continue?
If you don’t want the business dissolved, establish a succession plan. In addition to who will fulfill your role as owner, you can also appoint managers to assist with the transition. When you’re the sole owner and want to sell, you can also state your desire to do so.
How can I help loved ones manage my affairs?
Keeping your loved ones in the loop while you’re alive will make it easier for them to navigate business matters after you’re gone. Gather tax returns, contracts, bank account information, client invoices, emails, and anything else the executor or power of attorney might need later. You can store the files online or keep hard copies in a safe, and then give the point person access to the information.
For help creating your estate plan, contact Sippel Law Firm PLLC. Based in Kingman, AZ, the attorney has over 35 years of experience creating wills and trusts for clients throughout Mohave County. This lawyer is also well-versed in probate law and will put directives in place to help beneficiaries get their inheritance faster. For a consultation, call (928) 753-2889 or read reviews on the firm’s website.