Like most entrepreneurs, I take great pride in my business. I continue to nurture this new law firm from its beginning as an idea through conception, to growth, and maturity. Running a business is much like raising a child; both require a lot of time, tears, resources, and effort to be successful. People often plan for what would happen to their children if that parent were to pass away unexpectedly, however, they don’t always consider what would happen to their business – and how that would affect their family. It can be scary to consider; as we know, life is uncertain. Creating an effective estate and succession plan is an ongoing process that will change in each phase of the business’s life.
Business owners pour blood, sweat, and tears into their businesses, often struggling and making sacrifices for the company to survive. But what happens when they are no longer around to run their business? Entrepreneurs should be aware of the unique issues they face when creating an estate plan. They must take specific steps to ensure their business continues on after they are gone.
People often think that estate planning and business succession planning happen later in life or at maturity of the business. Let’s face it, the logistics of running a business is more than enough to stress anyone out. Adding on to that the contemplation of one’s own mortality during younger years is a tough sell to a business owner. In the past, young entrepreneurs and start-up owners were less likely to plan for these things right out of the gate. But now, post-pandemic, things have shifted and 18-34 year olds are beginning to take the lead when it comes to creating an estate plan.
What happens after the owner passes away? What if the court system ties up the business assets for months or even years until your estate is settled? Or even worse, what happens if they hand the business over to an unprepared family member or court-appointed fiduciary? Without a proper estate and business succession plan in place, these scenarios are very possible.
Successful estate and business succession planning requires professional advice. Entrepreneurs should consult with an estate planning attorney, accountant, financial planner, and an insurance agent.