Most entrepreneurs have a primary goal of growing their business, but they often forget to evaluate what might happen if they were to suddenly pass away, become injured in an accident and have to step away from the business or to suffer an illness. Business owners who fail to have an appropriate estate plan in place could minimize all of the work they have put into their business already. Traditional estate planning tools can be very valuable for an entrepreneur, including a trust, a power of attorney and a will.
However, there may also need to be additional steps taken such as using a buy/sell agreement, having a succession plan for the business itself and obtaining an appropriate insurance. The most basic estate planning document that any entrepreneur should have is a will. This determines how your assets will be distributed and who will receive them. A will also allow you to name a personal representative or an executor to step in and manage the disbursement of your personal and business assets.
Another recommended estate planning tool for the entrepreneur is a power of attorney, which names another person who can step in and handle your business affairs in the event that you are incapacitated.
A buy/sell agreement would outline what would happen if you were to suddenly leave the business due to disability or divorce. This kind of agreement can also be extremely valuable if one of the business owners is going through a divorce or declares bankruptcy. There are many different types of buy/sell agreements and consulting with an experienced business attorney is strongly recommended. A total estate plan for any entrepreneur will also include a written succession plan about the business, outlining the official transition such as who is eligible to take over managerial and executive duties? The key take away in this situation is that it makes sense to have an estate plan and consulting with an attorney who has experience in this field is extremely beneficial.
