All business owners can benefit from some level of estate planning. Building protection into your business plan is one of the most important decisions you can make to safeguard your partners, your employees and your family. Here, we will discuss the four key components of estate planning to make sure you are well set up for success.
The most fundamental estate planning tool is a will. A properly executed will, gives clear direction to your executor about how to manage or distribute your assets when you pass away.
Then, a somewhat more complex component of an estate plan is a revocable trust - this is a legal entity created to hold your assets while you're alive. Among the many benefits is that your appointed trustee can take over management of your assets if you're incapacitated. A revocable trust streamlines the transfer of your assets by helping avoid potentially lengthy legal proceedings and costly court fees. A trust may also provide creditor protection for the beneficiaries.
Next are powers of attorney. Naming a healthcare power of attorney means your representative can make crucial medical decisions on your behalf should you be unable to, while a financial power of attorney can pay your bills and manage your finances until you get back on your feet.
Finally, a buy-sell agreement is a powerful estate planning tool. A buy-sell agreement is a way to help ensure a smooth transition of your business and ensure your family's financial goals are met after you're no longer around to take care of them. A buy-sell can also outline the terms of succession among the remaining partners, so that all terms are agreed upon in advance.
Some basic estate planning may be done using self-guided online tools, but typically you should use a licensed and experienced attorney to help you draft and execute your plan. The best way to go about it is to make sure that your attorney, financial advisor, and insurance agent are working together on managing and planning your estate.