Founders, entrepreneurs and business owners have unique considerations when it comes to estate planning. Passing away suddenly without such planning in place can have major implications, not only on loved ones but also employees, shareholders and business partners. It is therefore important that entrepreneurs take time to do basic and important estate planning tasks that take the future of their business into account. These steps include:
- Organizing key documents: Key estate planning documents include a will and power of attorney (medical and financial). Those who have a sole proprietorship should clarify their wishes for the business after they pass away. For example, it could be left to a family member, sold with proceeds split between multiple people or simply dissolved. Once these documents are drafted, they must be notarized and stored somewhere they can be accessed by the executor in the future.
- Setting up times to review plans: Businesses can go through various iterations and plans for the future may change as this happens. Many business owners choose to review estate plans every year around tax time. They should also be looked over when a major milestone takes place, like a marriage, divorce or signing on of a business partner.
- Detailing and discussing succession plans: In addition to a traditional estate plan, a written succession plan is key for entrepreneurs. Research shows that a succession plan can sizably company valuations and investor returns. It can also give those within your business peace of mind and protect the hard work put into building a firm.
In short, entrepreneurs must think about their personal and business future when estate planning. There are many historical and current examples of what can happen to a family and a firm if estate and succession plans are not properly considered, and it’s worth taking steps to avoid these negative outcomes. Contacting a Texas estate planning attorney is a good first step to getting these documents drafted, validated and properly stored.