Estate planning should be a top priority for anyone who has built and grown a successful small business, especially if they intend to build generational wealth and create a legacy. The title of a recent article from Business Insider says it all: "You might not want to think about estate planning, but as a financial planner, I know it's essential for small-business owners."
Estate planning in Tyler or Mineola is a complex endeavor for business owners. Therefore, be sure to work with an experienced estate planning attorney in Texas to create a plan that protects you, your family, and your business. This article discusses small business owner planning basics to keep in mind, including why a small business needs estate planning, the core legal documents, and important business planning tools for owners.
A business owner needs estate planning to protect themselves, their business, and employees if they have any. Protection means avoiding probate if the owner dies, shielding business assets from litigation or creditors, and empowering a trusted person to continue business operations if the owner is incapacitated. A small business owner considering an estate plan should explore core legal documents with an experienced estate and business planning attorney in Texas.
A comprehensive plan has several legal documents for individuals, families, and business owners, including a will, revocable living trust, and power of attorney (POA). Book a consultation with trusted Tyler Estate Planning Attorney Bradley Campbell for help with your small business planning.
Last Will and Testament. This document is the foundation of an estate plan, providing directions to the Texas state probate court regarding your wishes for distributing assets. It also names a guardian responsible for minor children upon your passing. If you don't have a will, the court decides asset distribution according to Texas’ intestacy laws.
Revocable Living Trust. A revocable living trust gives you more control over property, funds, and company equipment, allowing for business asset distribution when necessary. A business owner can easily alter a living trust, so updated trust terms reflect changes in the business.
Financial Power of Attorney. This document is critical if the business owner performs most of the business's financial tasks. A power of Attorney (POA) grants an individual the authority to act and make decisions for an incapacitated business owner. The individual named in a POA can pay bills, make bank deposits and withdrawals, file business and personal taxes, and make other financial decisions.
A business succession plan should be in place as soon as your business becomes successful for business succession and addressing digital assets.
Business Succession Plan. A succession plan facilitates the transfer of ownership to a friend or family member if you retire or pass away. What if your heirs don't know how the business works? Do you want them to sell it after you pass or maintain it for the next generation? Succession documents include buy-sell agreements or Family Limited Partnerships. Read our blog, “Seamless Family Business Succession in Texas: Innovative Strategies for Passing the Torch,” to learn more.
Digital Estate Plan. We spend so much time online. However, few have plans for digital assets. If your business is online, has a website, and uses social media, online finances, and cell phones, you need a digital estate plan to identify assets and provide instructions on what you want to be done with those assets after you have passed.
Your business, likely your most valuable asset, deserves careful consideration within your estate plan to ensure a smooth transition of ownership and management in the event of incapacity or death. Preserve the legacy and values of a family business for generations to come. Book a consultation with trusted Tyler Estate Planning Attorney Bradley Campbell for help.
Reference: Business Insider (March 22, 2024) "You might not want to think about estate planning, but as a financial planner, I know it's essential for small-business owners."
