Although nobody likes to think about their mortality, it’s important that they do. They have to think about those who are left behind, and this is particularly true when they are the owner of a business.
You Need a Succession Plan
How does it change hands after you pass away? Does it just fade away and no longer exist? Typically, it will end up going to your estate. However, it can depend on how your succession plan was created—or if you had a plan in place. In cases of a family business, it will likely go to whoever you named in your estate. The family member you name should be someone you feel is qualified enough to run the business.
Who this person is might change over time, which means you may need to update the plan when it’s called for. If you haven’t properly prepared a succession plan or updated it, the business may not go to the person you want it to.
What Happens to the business
When a business goes to the estate after you die, your executor will divide the assets according to your wishes. If the estate plan doesn’t address the business, though, it is going to end up creating some confusion, and you can be sure a lot of questions will arise.When a business goes to the estate after you die, your executor will divide the assets according to your wishes. If the estate plan doesn’t address the business, though, it is going to end up creating some confusion, and you can be sure a lot of questions will arise.
One of the options is to set up a trust, which can be overseen by a board of trustees. They can take care of the business until the children are old enough. Of course, you may want your kids to benefit from the business, but you may not feel as though they should operate the company, even if they are 18 or over.
If you have children who are under 18, they may be able to inherit and own the business. However, because of their age, they will not be able to handle certain business activities, such as signing contracts. When creating a succession plan, if you have minor children, you will also have to plan for the day-to-day operations of the company.
Talk with the attornies at Bell & Shah. We Can help get your estate plan in order, and to ensure you are setting your business up for success after you have passed away. Whether you are going to give the business to your children, a spouse, or someone else, take care of the legalities before it’s too late.