Many small business owners do not have an estate plan set up. Many business owners who do have a business plan don’t have an updated estate plan. Taking the time to create a business estate plan is incredibly important. You’ve worked hard, putting your blood, sweat, and tears into building up your business. Creating an estate plan will help you ensure your business’s future while protecting your family at the same time.
Start by Creating a Basic Will and Basic Estate Plan
If you are overwhelmed by the thought of creating an estate plan while managing your business, you aren’t alone. The first step of creating a business estate plan is to decide whether you want a will-based or trust-based estate plan. If you’d like a will-based estate plan, you can create a will to state how you’d like to distribute your business and other property upon your death.
Without a will, the probate court will divide up your business according to Massachusetts’ intestate laws. If your family depends on your business’s income, you don’t want to leave them without a chance to access the assets or the profits of your business. By creating an estate plan, you can make sure that your business stays intact, and they can access it.
Create a Power of Attorney
If you are the owner of a small business, chances are, you’ve poured much of your time and energy into developing a profitable company. Many business owners wear many hats, managing employee issues, accounting, and day-to-day operations. When a business owner becomes incapacitated or passes away, it can leave the other employees without knowing how to keep the business operating. Business owners can appoint a power of attorney to manage business transactions and interactions if they become incapacitated. Be sure to select someone you trust to manage your business and keep things running smoothly.
Creating a Trust for Your Business
Depending on your business’s size and complexity, and your goals for the future, you may benefit from transferring ownership of your business into a trust.
In a trust-based estate plan, you can make the business succession process easier for your spouse. When a trust owns your business, your spouse won’t need to go through a probate court to take over your business when you die. Instead, you can set up your trust so that they become a trustee and/or beneficiary of the trust when you become incapacitated or pass away.
Family business estate planning can become tricky, especially when one adult child is interested in taking over the business and the other child doesn’t. By taking the time to establish a trust-based plan, you can determine who will run the business and act as a trustee, making it easier for people to move forward.
Talk to an Experienced Estate Planning Lawyer
If you would like to start creating a business estate plan, Surprenant & Beneski, PC, can help. Our dedicated team of experienced estate planning lawyers works with each client to create an estate plan that meets their needs. Contact us today to schedule your initial consultation.
©Surprenant & Beneski, P.C. 35 Arnold Street, New Bedford, MA 02740, 336 South Street, Hyannis MA 02601 and 45 Bristol Drive, Easton MA 02375. This article is for illustration purposes only. This handout does not constitute legal advice. There is no attorney/client relationship created with Surprenant & Beneski, P.C. by this article. DO NOT make decisions based upon information in this handout. Every family is unique and legal advice can only be given after an individual consultation with an elder law attorney. Any decisions made without proper legal advice may cause significant legal and financial problems.