If you own a small business, it’s essential to devise a comprehensive estate plan sooner rather than later. Not only will various arrangements preserve your life’s work, but they’ll also protect your loved ones in all eventualities. When you’re ready to get started, a seasoned attorney can help. In the meantime, here are the answers to some of the most frequently asked questions on the subject, so you know what to expect along the way.
Common Questions About Estate Planning if You Own a Small Business
What is a business succession plan?
A business succession plan addresses both financial and logistical considerations that will inevitably arise in the event of your untimely passing. Depending on its terms and your long-term goals for the company, creating such a plan will allow your business to remain operational in your absence.
Do I need a buy-share agreement?
Unless you’re the sole owner of the business, you'll need to implement a buy-share agreement. This contract should state how much your share will be worth upon your death.
Depending on the company’s dynamics, it may also include terms that either allow or prohibit certain individuals from buying your share. This ensures neither owner ends up with a partner with whom he or she does not wish to collaborate.
Should I create a power of attorney specifically for my business?
Most comprehensive estate plans require multiple powers of attorney (POA). You might want to give one party the authority to make medical decisions on your behalf, for example, and another the right to handle your finances. Should you ever become incapacitated, such arrangements could prove to be invaluable.
It’s also wise to create a separate POA for your business. This will ensure someone can step in immediately if you end up in the hospital or if you pass away unexpectedly. Without such a document, operations could cease until the probate court determines who should be in charge.
How can I mitigate disputes among relatives?
If you own a family business, your estate planning attorney may advise you to discuss the arrangements with all relevant parties once they're finalized. This will give your children time to come to terms with your plans, especially if the distributions are not what they anticipated.
For example, perhaps the son who works with you now was anticipating a larger share. If you explain your reasoning for distributing the business in the way that you did, he’ll be less inclined to contest the plan once you pass.
For help creating your estate plan, turn to McPherson & McPherson Attorneys at Law. Located in Coupeville, WA, this locally owned and operated firm was established in 1997 and has been providing strategic counsel ever since. From last wills and powers of attorney to community property agreements and living trusts, their knowledgeable team can assist with all kinds of arrangements. To learn more about the firm, visit their website. To request a consultation, call (360) 678-4407.