If you're a business owner, you'd likely spend most of your time working on your business, you're growing it, it's almost like another child. But, just like real children, you want to make sure you have a plan for the future of your business and your family.

Before You Started Your Business

Now before you started your business, you probably went through a lot of steps, a lot of processes, maybe some market research, and you're probably spending a lot of time working on your business. It's almost like another child, it's keeping you busy, but don't neglect things at home. It's just as important to make sure that all that planning that went into your business is also going into your personal legacy.

What I find working with small business owners is that they tend to have a very good vision of where they want the business to go in the future. But when I asked them what kind of planning, they have for their family, they say "oh, well, it's one of those things I'll get around to." This isn't something you should just wait for a rainy day and get around to, this is something you need to have in place now.

What is an Estate Plan

So when I speak to small business owners, they, of course, want to know what is an estate plan? What documents does a business owner need to have?

Your estate plan is primarily composed of three different areas that are important for business owners.

  1. The first is to have a will or a trust. These are the documents you're probably most familiar with. If you've ever had to deal with a loved one who's passed away, the will or trust will say what happens to the person's property. If there are certain assets to go to certain people, it's probably listed out in the will. Some people do more advanced planning which is usually using a trust, in which case their assets may already be put into that trust as its own separate succession planning, and as its own beneficiaries.
  2. The second area you want to make sure you have planned for is what's called a financial power of attorney. Let's say you're running your business and something happens to you, like you're in a car accident and you become incapacitated. If you're unable to run your business, you need somebody there who can step in, sign the paperwork, handle the financials and work in your business. Now if you have a bunch of employees, there's probably a manager or somebody who can absolutely step in and work on the day-to-day obligations of the business. However, to be safe, you want to have a power of attorney that designates the right person to be legally responsible to help out your business for the time you're incapacitated. 
  3. The third area you want to make sure you have dealt with is the healthcare power of attorney. So if you're incapacitated, you've been in that car accident, you want to make sure somebody has been appointed to run your business and take care of the affairs, but you also need to make sure that the right person is making healthcare decisions for you. Now traditionally if you're married and have kids you just assume that your spouse will be the one to step in, but a lot of business owners and a lot of people are not married, and a doctor or hospital does not know who should be the right person, that they should be talking to about major health decisions, a healthcare power of attorney will list the initial person who the medical staff should be talking to. And you usually want to appoint two to three alternates in case the first person is unable to make those decisions. It's very important, as we've seen that coming out of the COVID pandemic you want to make sure you have the right person making those health care decisions for you.

Now when you're looking at running your business and your personal estate plan, this also gets the notion of having the right team around you. Now as a business owner, it's important to have a TEAM (that's Trusted Experts Authorities and Mentors), people you work with the professionals who know your finances who know your technology, who know your banking, you want to make sure that you have the right team around your professionals to work with you. In the case of a business owner who needs an estate plan, you want to make sure you have your attorney preparing your documents for you. You want to make sure your financial advisor, knows what that estate plan is going to be so they can properly set up your finances. You want to make sure your accountant is in on the entire design so they know what's the best way to formulate your state for tax purposes.

What you'll hopefully see is it's important that you have a good team around you professionals to help you make an estate plan for your personal life, that's as detailed and as focused on your legacy. As you've already created for your small business.

Next Steps

If you've been running your business and you realize it's important to get your estate plan in order, let's set up a Legal Strategy Session to discuss the best next steps for you.