As a small business owner in Johns Creek, you have managed to build up a lucrative business from the ground up. The one thing you may have overlooked along the way is making your estate plans. Without them, all of your hard work could be in jeopardy.
Estate plans help to protect your wealth and legacy so that you can pass it down to your loved ones with minimal interference from the state. Chances are, your company accounts for a large portion of your wealth. In order to ensure that it survives and remains profitable after you die, you may want to consider the following factors about estate planning and business succession.
End-of-life care funds
You can designate how you want your company to transfer in the event you are no longer able to run it, or you die. You may need to sell a portion of your business to help cover some of your end-of-life medical and living expenses and funeral costs. By selling your stake in your company to your relatives, you may be able to recover the funds you need and avoid certain estate fees, such as the gift tax.
Business owners can pass a company to another individual through a living trust. If you do this, you are no longer the owner of the business. After establishing a living trust, you would transfer your company to the trust and then name a successor. The successor is the new owner of the business. You could still manage your company as you normally would while you are alive, until you are no longer willing to or become incapacitated.
If you are not quite ready to hand over the reins to your company, you could create a buy-sell agreement. The agreement gives the potential new owner the opportunity to purchase your interest in the company when a qualifying event happens, such as retirement, illness or death.
Illness and death can strike at any time. Make sure you are prepared by making arrangements for your company’s succession in your estate plans.