Estate Planning Considerations for Business Owners
When you own one or more successful businesses, you have a heavy weight on your shoulders when you begin estate planning in Louisville. The plans you make don’t just affect your beneficiaries; they also impact those who rely on your business for a source of income, for a much-needed service, or for the sense of community it provides.
Working with an estate planning attorney with experience in business ownership is key if you want a smooth transition for whoever takes over your business. We can help; call John H. Ruby & Associates at 502-895-2626 to set up a consultation with our team right away.
The Importance of Business Succession Planning
To start, you should know that this isn’t something that should be considered an aside to your estate planning. No, the future of your business should play a key role in your estate plan. Your family has likely watched you grow your business over the decades, and it has probably offered them significant financial security. Without careful planning and consideration, all of your hard work could evaporate in a matter of months after your passing.
Business succession planning ensures that the day-to-day operations of your business continue on even after you pass or become incapacitated. A thorough plan ensures that there’s a quick and seamless handover when necessary and that everyone involved knows their obligations when it comes to protecting the business’s future.
Engaging in business succession planning early on can also ensure that you and your beneficiaries are on the same page. It’s disheartening to imagine your child taking over the family business one day, only to find out decades later that they truly have no interest in doing so. But once you find that out, you’re in a better position to figure out who can give your business the future it deserves.
Fair Division of Business Assets
A fair division of business assets is key if you want to avoid family disputes and wedges between loved ones. Keep in mind that this may also mean ensuring that a business has enough liquidity to accommodate everyone’s needs. For example, if you have multiple children, some may want to continue running your business, while others may want to be bought out and use the money to further their own dreams. Ensuring that the business has enough liquid assets protects everyone involved.
You’ll need to secure a fair valuation of your business to divide it fairly among your heirs. There are multiple ways to value a business, and the best option depends largely on your industry and the stability of your company. Your estate planning attorney may have experience in this area or they may be able to point you to a financial planner who can put you on the right path.
You should also consider the other assets that will be included in your estate plan when deciding how you want to divide the business. If you have enough non-business assets, liquidity may not be an issue; you may simply be able to balance out business shares with other assets, giving everyone a fair share of the estate.
Preserving the Business’s Value
Open and honest communication, even when it’s painful, is a key part of your business’s future success. Knowing what your beneficiaries want and what they plan for the future allows you to better plan for the business. When you pass, this commitment to open communication lays the groundwork for a smooth transition of leadership. With no disruption to employment, services, and funding, your business will be better poised to thrive long after you pass.
Keep in mind that regularly updating your estate plan is part of this. Your business could change many times between the creation of your estate plan and your death, and you want your estate plan to reflect the current value and goals of your business—not the ones you had for your company 10 or 20 years ago.
Planning for Your Future? Contact John H. Ruby & Associates
It’s never too early to start planning for the future of your business and your estate. When you’re ready to get started, let’s talk. Call us at 502-895-2626 or get in touch online to set up a consultation with our experienced team.
