We know how stressful being a business owner can be, and how you always seem to be juggling 101 different things. But, if there’s one thing that should be at the top of your to-do list it’s your estate plan. Only 30% of business owners have an estate plan, and on top of this, 70% of those who do, haven’t updated it since a life-changing event.
You’ve worked so hard over the years to build your business, so why risk it all by not having an estate plan? Firstly, it’s important to decide what you want to happen to your business should the worst happen to you. You may wish to close the business, leave it to family members, or allow your business partners the opportunity to buy your shares. Whatever you decide, it should be stipulated in your estate plan and ensure that any partnership/shareholders agreement you have does not conflict with your wishes.
If you don’t already have a Will, it should be a top priority to create one. If you die without a Will, your business may be shared according to the rules of intestacy meaning it may not go to who you wish. Creating a Will and ensuring it’s up to date means any chaos and confusion will be avoided in the future. It’s also important to appoint an Attorney for your business finances who will be able to make decisions on your behalf should you be unable to, whether that is due to unavailability and/or due to an accident or illness.
It’s also important to consider whether your business needs Key Person Protection. A key person may be a partner, member, senior employee or yourself as the owner. If your business’s key person/s suddenly died or became critically ill, what would happen and would it have a detrimental effect on the profits of your business? If so, it’s wise to make sure you protect your business from these circumstances with adequate insurance protection.
On a final note, you may also wish to consider Shareholder Protection as a way of protecting the business after the death of an owner, or if they are diagnosed with a critical or terminal illness. This protection allows other business owners to purchase shares back from said owner, minimising disruption to the business.
If you are a business owner who is yet to create an estate plan, or if yours needs updating, get in touch with Kindred today.