Many of today’s businesses, including modern and lean startups, are built to be owner-dependent businesses. This type of businesses depends highly on the presence of the main owner; the owner often acts as the main leader of the business too.
Aside from the day-to-day operations and the long-term strategy of the business, you as the business owner also need to plan ahead and make the necessary preparations for when you retire or pass away. Maintaining the smooth operations of the business is even more important when there are employees involved. What you need is good estate planning.
The Main Goal of Estate Planning
The primary goal of doing proper estate planning when you are a business owner is preventing a complete loss of equity in an unexpected situation. This is a problem that many successful business owners have tackled in the past, and it is a problem that you need to look into as a business owner today.
When a business is owned by one strong owner, most of the profit generated is taken out of the business itself. Only a small portion of that profit gets re-invested to build a better, stronger management team for the business. This same pattern can be seen even when there are multiple owners involved.
With the help of estate planning, you have more options. In the event of your death, your beneficiaries don’t have to (unintentionally) become the owners of the company. You can have your share automatically purchased by other owners or the management team for a smoother, more sustainable transition.
Additional Benefits to Gain
There are other benefits to gain from doing proper estate planning when you are a business owner. For starters, you can work with firms specializing in estate planning such as the Katzner Law Group to find tax advantages to utilize. For example, you can choose to establish a grantor retained annuity trust or GRAT for your children, all while retaining a source of income for yourself.
Estate planning also gives you the ability to strategize further. For instance, you can choose to have the business continue to provide an income for your family, even when a portion of your ownership gets transferred in the event of your death. It provides the right financial protection your family needs in such a circumstance.
Estate planning is about planning for the future; there is no better time to get started than today. The sooner you tackle the issue of creating a plan, the better you and your loved ones will be in the future.
The best way to start is by consulting an estate planning expert. The expert will then review your financial state and other details, including the state of your business. You have complete control over the entire process; the estate planner will only recommend the best options you have, but it is entirely up to you to choose the plans you want to put in place. You’re not just protecting yourself and your business, but also protecting your partner and children as well as their future.