As a business owner, there are all kinds of estate planning documents that could help you protect yourself and your business. Many of these documents are typical of all good estate plans, but there are some additional documents that can aim to protect your business and guide how you want to pass it on if you pass away or become incapacitated.
A succession plan should be discussed as part of your estate plan. This plan goes over who will take over the business if you cannot run it any longer. You should have a succession plan in place in case you are incapacitated, retire or pass away.
The main documents you will need to have in place to help pass on your business and protect your interests include:
- An advance health care directive that goes over your medical care and treatment at the end of your life
- A revocable living trust that gives you an opportunity to assign a trustee to manage your personal and business assets when you cannot
- A last will and testament to help pass on assets without probate
- A financial power of attorney document to assign a person the authority needed to make decisions on your behalf
- A medical power of attorney to assign a person to make medical decisions for you when you cannot
Along with a strong succession plan, these documents make sure your wishes are followed.
What are your options for passing on a business?
You have a few options for passing on your business (or selling it) when you retire, are incapacitated or pass away. The main options include:
- Closing the business
- Selling ownership of the business to your business partners
- Selling the business to a third party
- Passing on the business to a family member, friend or other beneficiary
If you’re getting older and are ready to pass on your business, now is a good time to talk to your loved ones about your preferences and goals. You may want to look into further legal protections to help you pass on your business, too, depending on your circumstances and what you want to see happen to your business later in life.