Many entrepreneurs refer to their business as their “baby” and rightfully so. Like a child, entrepreneurs nurture their business from 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 prepare for what would happen to their children in the event they pass away unexpectedly, however, they don’t necessarily consider what would happen to their business – and how that would affect their family. While it can be scary to consider, 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 business, often struggling and making sacrifices for the company to survive, in an attempt to create a legacy that will provide for themselves and their families. 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 action to ensure their business continues on long after they are gone.
Entrepreneurs often think that estate planning and succession goals happen later in life or at maturity of the business. Let’s face it, the upkeep of running a business is more than enough to worry about, much less considering one’s own mortality in their younger years. In the past, young entrepreneurs and start-up owners were less likely to plan for these things right out of the gate. As we continue to come out of the pandemic, the roles have reversed for the first time in history, allowing 18-34 year olds to take the lead when it comes to creating an estate plan.
Often business owners don’t consider what would happen to their “baby” without a leader. What happens after the owner passes away – when the court system ties up the business assets for months or even years until your estate is settled? Or even worse, they hand the business over to an unprepared family member. Without a proper estate and business succession plan in place, these scenarios are entirely likely.
Successful estate and succession planning requires a team of professionals. The team should include an estate planning attorney, accountant, financial planner, and an insurance agent. An important first step in creating the plan is consulting with an estate planning attorney and then ensuring that all of the professionals are in communication with one another in order to accomplish their succession goals.