Business transition plans and estate plans, though similar, are not identical creatures. If you are a business owner, your business transition plan should allow you to step away from your business in the manner you desire. Your estate plan, on the other hand, will give you control over your estate in the event you become incapacitated or die.
When you create either a business transition or estate plan, both of these plans need to recognize the choices you make in the other. Weaving the different tools together to give you comprehensive protection is something that can take time, careful consideration, and regular updates. Today, we’re going to look at what these two plans are intended to accomplish, and how they do it together.
Business Transition Planning
Whether you own or operate a small business, large business, or anything in between, planning on stepping away from the day-to-day operations is something that many people find difficult. When your business is so ingrained in your daily life, even thinking about stepping away can be stressful. Nevertheless, there will come a day when you will need to step away from your business, or, at the very least, decrease your involvement in daily operations.
But how do you do this? Will you transfer your business responsibilities to a current manager, or find someone else? Is there someone in your family to whom you want to transfer your responsibilities? If you don’t want your business to continue after you are no longer involved, or are unable to find someone who is willing to take over for you, is selling your business an option? If selling isn’t likely, what else is there?
To determine the answers to these questions you may need to spend a lot of time thinking about your life and your goals, as well as talking to experts about your options. Consulting with your accountant, attorney, business advisors, family members, and anyone else who can help you make your decision is essential.
Then, once you’ve made your decision, you need to speak your attorney about creating the tools that will allow you to transition your business in the manner you wish.
Business Transition Planning and Your Estate Plan
Not all business transitions happen in the way we want them to happen. In particular, business transitions that happen after a business owner has become incapacitated or died can be particularly problematic if there is no estate plan in place.
A good estate plan will allow you to create tools that will protect your business in the event you become incapacitated or die unexpectedly. Good estate planning tools will also allow you to ensure that your business will transfer to new owners after you die.