Estate Planning for Business Owner

Business owners are always preoccupied  with their work. Everyday they wake up, their focus is mainly on how to settle their day to day challenges and brainstorming ways to build more profit. Often, they miss out the most important things in life which is to START THEIR ESTATE PLAN.

In fact, 30% of business owners have no estate plan, and many of those who do haven’t updated their estate plan recently. (1) 

As a business owner, large portion of your income comes from your company so it is vital to state a clear direction on how you company going to operate in the event of incapacitated (coma, missing in action) or pass on. Otherwise, the empire you took your lifetime to build could be in jeopardy. 

Estate planning for business owners goes far way beyond just creating a Will. While creating a Will is just a first step, business owners also need to set a Trust plan to protect themselves in the event of disability, coma or missing in action and a succession planning for the ideal successor to take over. 

First a business owner should start estate planning with a Will. They not only need to plan their distribution of personal assets but they also need to plan the person responsible for the continuation of the business. For business owners, not having a Will can be detrimental not only to family members, but it will affect your partners, employees and the sustainability of the company. 

Have you ever thought WHO would take over your business today if an unexpected event occurred yesterday? Most of the time people kind of ignore this type of scenario but the fact is succession planning is vital. When a succession plan is in place, it can minimize company interruptions while ensuring business continue as usual in the event of incapacitated or pass on. To keep business going without you, you have to choose the key decision makers to take charge if you are unable to do so, hence making sure the important information and strategy are being transferred smoothly to your successor. 

Another point which a business owner often left out is liquidity. Have you ever thought of WHICH ‘pool of money’ should you use to buy over your partner company shares should an unexpected passing occurred? Not having enough liquidity to buy over the company shares can make ways to their family members to take over. Consequences can affect both parties. For the deceased family, they may not want to take over the business and end up selling the shares to another partner at a discounted price. For the surviving partners, they may not feel comfortable working with the deceased family member and finally end up winding up the company. As a business owner, you can prevent the above scenario from happening through setting up a Buy & Sell Agreement upfront and purchase an insurance policy to create extra liquidity to buy over your partner shares. 

Without a strategic succession planning, business owners may face an erosion of one’s estate value from taxed, creditor’s claim, outstanding liabilities and wealth dilution. Just like an old saying, 1st generation earn money, 2nd generation spend it and 3rd generation blow it. The great news is the above concern could be mitigated with just one step ahead, START YOUR ESTATE PLANNING NOW!


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