Your business is more than just a job or a source of income. It represents your belief in yourself, your hard work and your sacrifice.
But what would happen to your business if you suddenly became incapacitated or passed away? For business owners, estate planning is more than just deciding who inherits your assets. It’s also about protecting your employees, customers and the legacy you’ve worked hard to build.
Your business is part of your estate
It doesn’t matter how your company is structured, whether it’s a sole proprietorship, partnership, LLC or corporation. Your ownership interest becomes a part of your estate. If you don’t have a clear plan in place, Tennessee’s laws could determine who inherits that interest, which may not align with your wishes.
Without direction, problems can arise, such as:
- Your heirs lacking the experience to manage the business
- Disputes developing between family members and co-owners
- Lowered employee morale or loss of good workers
Furthermore, the business may need to go through probate before control is fully transferred, which can delay critical decision-making.
A clear succession strategy should be part of the business owner’s estate plan. That could mean transferring ownership to a co-owner under a buy-sell agreement, passing the business to a child involved in the operations or selling the company and distributing the proceeds.
If you have business partners, a written agreement is especially important. It can outline what happens if one partner dies, becomes disabled or wants to leave the company. Without such an agreement, the surviving partners could find themselves working with a spouse or heir who knows nothing of the operations and never intended to take part.
Estate planning isn’t just about preparing for death. Incapacity from an injury or illness can create just as many problems.
If you are unable to manage your affairs, you need a power of attorney. This person has the legal authority to act on your behalf in business matters. Without such protections, your family may face unnecessary delays just trying to keep the company running.
You have a lot invested in building your business. An estate and succession plan helps ensure your hard work continues to benefit your family and those who rely on your company.