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Estate and Succession Planning for Small Business Owners

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Estate and succession planning can be complicated, especially when running a small business. Are you wondering why you need an Estate Plan, especially under 40? This business blog article will give you an overview of why it’s important to safeguard your beneficiaries and plan for your business’s future.

The topics covered in this article include:

  • Types of Estate Plans
  • Who needs an Estate Plan
  • Why you need an Estate Plan
  • When you should Create an Estate Plan
  • The importance of Succession Planning

What is an Estate Plan and Estate Planning?

An estate plan is a legal document that helps protect your assets after you die. It also ensures that your family has access to those assets if something happens to you. If you own a business, you should consider creating an estate plan because it’s not uncommon for people to pass away unexpectedly.

Estate Planning

There is a fair bit of organization required in estate planning and it includes:

  • Working out the individual’s assets
  • How assets will be managed and distributed after the person’s death
  • Creating a will, and maybe Trusts
  • Tax planning including donations to charities

Who do you need to help you with Estate Planning?

Typically you will need an Accountant and a Lawyer. Your accountant will know how to minimize tax obligations, and your lawyer will set up your Estate Plan.

Who Needs An Estate Plan?

Everyone with assets like property, shares, cash, businesses, digital currencies, and more. Essentially any asset that has a value should be in an Estate Plan.

You need an estate plan if you own a business or other assets you wish to pass on to another person. An estate plan helps ensure that your wishes are fulfilled when you die. It also protects your family from having to deal with probate court proceedings.

Is there an age limit for creating an Estate Plan?

No, there is no age limit on creating an Estate Plan. However, beneficiaries must be 18 or older to receive the asset or funds.

Minor beneficiaries have their inheritance held for them in a Trust. Laws look after minor beneficiaries’ inheritances.

When Should You Create an Estate Plan?

It’s never too early to start thinking about your estate plan. If you own a business, you should consider creating an estate plan as soon as possible. This includes making sure you have a will and naming a successor to run your company after you die.

Types of Estate Plans

There are two main estate plans types: Wills and Trusts. However, there are two types of Trusts, so there are three main types of plans.

  • A simple Will
  • A Living Trust
  • Revocable Living Trust

The first step in creating an estate plan is deciding what type of plan you want.

Simple Will

A simple will is a document that names a person to take care of your assets if you die without a will.

Living Trust

A living trust is similar to a will, except that it gives control of your assets to trustees who manage them until you pass away. Finally,

Revocable Living Trust

A revocable living trust allows you to change the terms of the trust at any time.

The Importance of Succession Planning

If you own a business, you should consider creating an estate plan. This will help protect your business interests and ensure that your business continues after you die. A good estate plan includes a will, trust, and living will.

An estate plan is important because it helps ensure that your assets go where you want them to go. For example, if you leave your company to your children, then your family won’t be able to sell it without your consent. Also, if you leave your business to your spouse, he or she might try to take advantage of your business. You can avoid this by leaving your business to your children instead.

Another way of looking at the importance of an Estate Plan for your business is its succession plan.

A succession plan is one of the most important parts of an estate plan. In fact, it’s often overlooked. However, it’s very important to have a succession plan in place. Without a plan, your business could end up being sold at auction or taken away from your heirs.

Summing Up

When you’re a small business owner, especially when the business depends on you as the owner, which most are, estate planning is essential.

Estate planning is important for everyone with assets, irrespective of age. Minor beneficiaries are protected by laws, and with succession plans part of the estate plan when you’re a business owner, you’re looking after what happens to the company.