Entrepreneurship can be a double-edged sword. While you may reap great rewards for being a business owner, so too do the responsibilities mount. It may be tempting to put off planning for the life of your business after you're gone -- especially at a young age. Unfortunately, too many people have failed to plan for the unexpected and left their heirs and remaining business partners with no direction as to their wishes.
Thus estate planning is key, as is making sure that your spouse, if you have one, is on board and knows the ramifications of your decisions. While the process could seem daunting, there are a few basic tips that can help people navigate the process:
- Have a buy/sell agreement in place. If you want to have the business pass to your partners, as many people do, spell that out; if you want it to go to your family, spell that out as well. The one thing you don't want to have happen is to leave your wishes a mystery.
- Know who you're dealing with. Estate planning is a process that requires lots of thought, and the more complicated your business is, the more time you'll need to spend discussing its implications with an estate planner but also with your spouse and children so they know what they're in for.
- Make sure family assets are protected. A trust can be a good way to take care of this, provided you have the right trustee on your side. Other options include a family limited partnership or limited liability company (LLC). Whatever you choose, the key is to do it in advance.
Source: Forbes, "Preparing For The Inevitable: 3 Keys To Estate Planning For Female Entrepreneurs," Judith Schreiber Rowland, June 13, 2012