Your small business or new startup has launched to great success. Rightfully so; you’ve invested immense time, energy, and money to make it a success. But did you consider the personal financial challenges that come along with being your own boss? For many entrepreneurs, taking care of themselves personally comes second to running their business. In the urgent, day-to-day operations, it’s easy to delay action on some very important personal financial matters. The problem is, those seemingly non-urgent tasks can become urgent in an instant, and sometimes it’s too late.
Custom-Created Wills for Small Business Owners
Your estate plan should include a will. This document specifies how you want your assets to be transferred, and who they will go to, after you die. It also lets you identify an executor who will take charge of those assets and distribute them according to your instructions. It should also include a list of all online bank accounts, email accounts, social networking sites, and the usernames and passwords for each service you use. If you’re the only person running the business, that important information will be inaccessible to your heirs unless you provide it for them.
Trusts for Small Business Owners
Like a will, a trust allows you to control what happens to your assets after you die. However, trusts have several advantages. Any items you place under the ownership of the trust will bypass the probate process. So assets that the trust owns will be transferred to heirs much more quickly, your estate will remain private, and it could dramatically reduce the legal fees and estate taxes your estate or heirs will have to pay. The decisions you make in setting up your wills and trusts are not set-in-stone, but we develop a system so that you can update your documents through the years as your situation changes.
Small Business Owner Personal Insurance
Partners in a small business should purchase a term life insurance policy, naming the other partners as beneficiaries, or use an irrevocable life insurance trust to accomplish this, so that owners who are still alive will receive tax-free capital to purchase the other’s portion of the business from the estate. Whether you co-own the businesses or are the sole owner, you should also buy a separate term life insurance policy that names your spouse and children as beneficiaries. It is sometimes wise to have the proceeds of this policy used to fund your trust after your death. This is an option you can discuss with your estate planning attorney.
Small Business Power of Attorney
When you have employees who rely on you, you should consider creating a durable general power of attorney. This allows you to name an individual to carry out your business affairs in case you become incapacitated. If you don’t have this in place and something happens to you, the court will appoint a guardian to handle your business for you and most entrepreneurs don’t love that idea.
If you’re a small business owner, let’s talk about your estate planning situation. Your consultation with an expert estate planning attorney is free. Contact us today if we can help you.