Preserving Your Legacy: What Entrepreneurs Should Know About Estate Planning

Many entrepreneurs refer to their business as their “baby” and rightfully so. Like a child, entrepreneurs nurture their business from an idea through conception, to growth, and maturity. Running a business is much like raising a child. Both require a lot of time, tears, resources, and effort to be successful. People often prepare for what would happen to their children in the event they pass away unexpectedly, however, they don’t necessarily consider what would happen to their business – and how that would affect their family. While it can be scary to consider, life is uncertain and creating an effective estate plan that includes a business succession plan is important to do. It is also an ongoing process that will need to be reviewed and updated because it can change in each phase of the person’s life and the business’s life.

Why should I set up a business succession plan?

A business owner should set up a succession plan for the same reason they should set up an estate plan – to make life easier for their loved ones when they pass and to make a plan for how their “baby” will survive without them.

Often business owners don’t consider what would happen to their “baby” without a leader. What happens after the owner passes away – when the court system ties up the business assets for months or even years until your estate is settled? Or even worse, they hand the business over to an unprepared family member. Without a proper estate and business succession plan in place, these scenarios are entirely likely.

When should I make the plan?

A business owner should set up their succession plan when they are creating the business.

People, including entrepreneurs, tend to think that estate planning and succession planning are things to do when you and the business are older and more mature. Let’s face it, you have more than enough to worry about when you are busy running a business and raising a family. And nobody likes to consider their own mortality – especially in their younger years. But if you wait and something unexpected happens, then it will be too late and the business will be tied up in court and may end up being dissolved.

Successful estate and succession planning requires a team of professionals. The team should include an estate planning attorney, accountant, financial planner, and an insurance agent. An important first step in creating the plan is consulting with an estate planning attorney and then ensuring that all of the professionals are in communication with one another in order to accomplish their succession goals.