As a business owner, you have a lot on your plate. But there are some things you should do before you die to make sure your estate is taken care of and your business is in good hands.
1. Consider Estate Planning
You should consider estate planning if you have assets or a business that will be carried on after your death. Estate planning is the process of arranging your affairs, so they can be dealt with upon your death, including things like designating beneficiaries.
Many people avoid estate planning because it involves thinking about their mortality and making funeral arrangements. But there are several good reasons to do this:
- It allows you to decide how you want things handled after you die instead of leaving it up to chance or someone else’s interpretation of what you would like done.
- Estate planning gives peace of mind, knowing that everything has been taken care of in advance. There won’t be any questions left unanswered for those who survive you.
- You can avoid costly and time-consuming probate proceedings by making sure that assets pass directly to named beneficiaries upon your death.
- It allows you to avoid or minimize estate taxes by transferring assets before they appreciate too much, so less tax is owed on them at the time of transfer.
2. Make a Will or Trust
Even if you have a simple estate, it’s essential to make a will or trust. A will is a document that states how you want your property distributed after your death. Trusts are similar but can be used to manage assets for beneficiaries who cannot handle them independently.
If you don’t have a will or trust, the state will decide how your property is distributed, which may not be what you would have wanted. This can also lead to family disputes over inheritance.
Making a will or trust doesn’t have to be expensive, and there are many online resources available to help you do it yourself. You can also consult with wills and estate planning lawyers.
If you have a will, make sure it is up-to-date. If you get married or divorced, the terms of your will may no longer be valid. You should also update your will if there are changes in family members due to birth, death, adoption, or marriage.
Make copies of the document and give them to people who need them for future references, such as your spouse or children. Keep one with other vital records that can easily be found by those left behind.
3. Determine Your Advance Healthcare Directive
An advance healthcare directive is a legal document that allows you to outline your preferences for end-of-life medical care if you cannot make decisions or communicate them yourself. It can also be used to appoint someone else, like a family member, who will speak on your behalf and make decisions about your treatment if you are incapacitated.
This directive gives doctors and other medical professionals permission to withhold treatments such as CPR (cardiopulmonary resuscitation) when they believe further efforts would prolong suffering without substantially improving the patient’s condition.
It’s a good idea to have an advanced healthcare directive even if you are young and healthy because you never know what might happen. You can also change your mind about your preferences at any time.
4. Choose a Successor
If you have a business, it’s critical to choose a successor. This person will take over the business when you die or are no longer able to run it.
You need to think about how the business will be financed and what kind of transition plan there is in place. The successor should also be someone you trust implicitly and who has the same vision for the company as you do.
It can be helpful to have a succession plan in writing so everyone involved knows what is expected of them and when. This can help avoid confusion and conflict down the road.
Even if you don’t have a formal succession plan, make sure your chosen successor knows about your wishes and is ready and willing to take over when the time comes.
5. Determine Your Exit Strategy
No one knows when their time will come, so it’s essential to have an exit strategy for your business. This is the plan you put in place for how you will leave the company and what will happen to it after you’re gone.
Your exit strategy should include who will take over the business, how the transition will be managed, and what kind of financial arrangements have been made. You also need to think about what will happen to your customers and employees.
It’s a good idea to talk with a lawyer about your options and create a formal exit plan. This can help ensure that everything goes smoothly when the time comes for you to leave your business.
Even if you don’t have a formal exit plan, make sure your chosen successor knows about your wishes and is ready and willing to take over when the time comes.
Leaving your business behind is not something we want to think about, but it’s a necessary part of life and running any venture.