By John Arthur 
Want to protect your business after you’re gone?
Business owners have a different vision for the future. You want to leave behind a company you can be proud of. But…
Without proper planning, your business could be in jeopardy the moment you die or become incapacitated.
55% of Americans have no estate plan whatsoever. When it comes to business owners? It gets even more drastic.
If you don’t have a plan in place, your family could lose everything.
You’ve built a business legacy and want to pass it on to future generations. But that won’t happen if you don’t have a solid estate plan.
Business owners don’t just need to worry about personal assets. It’s time to protect:
- Your business operations
- Your employees’ livelihoods
- Your family’s financial security
- Your legacy
For business owners, a skilled Michigan estate planning lawyer is an absolute must. An experienced estate planning lawyer knows the ins and outs of your business and can protect your assets for generations to come.
What you’ll learn:
- Why Business Owners Need a Customized Estate Plan
- Avoid These 3 Estate Planning Mistakes Business Owners Make
- 4 Estate Planning Tools Business Owners Need
- Tips For Protecting Family AND Business Legacy
Why Business Owners Need a Customized Estate Plan
Business is hard.
Entrepreneurs have unique challenges they have to overcome in the course of running a successful company.
These challenges have a major impact on estate planning.
Personal assets and business assets are often intertwined.
Most small business owners have a majority of their net worth built up through their business. When business owners die, their families are forced to inherit their company.
The problem?
Your family is now responsible for an entire business. This may be completely new to your spouse and children.
Statistics show 64% of business owners have prepared a business succession plan.
But here’s the thing. 16% of business owners feel completely unprepared.
The 3 Biggest Estate Planning Mistakes Business Owners Make
Here’s the thing. You don’t have to follow best practices to do estate planning.
Lots of business owners do the bare minimum. But that’s why most estate plans for businesses fail.
If you want to protect your business for years to come, avoid these mistakes:
1. Mixing personal and business assets — Separation is critical when estate planning as a business owner
2. Not doing a business valuation — Undervaluing assets is an easy mistake, but your family may end up getting taxed by the IRS
3. Failure to plan for death and disability — Most business owners only plan for the death of the business owner
How To Avoid Disaster: Estate Planning Tools Business Owners Need
You can’t just write a will and think your business is safe.
Business owners have unique needs. A comprehensive estate plan is the only way to go.
The Core Documents
Every business owner needs:
- A business will — There’s a difference between a personal will and a business will
- Buy-sell agreements — This document covers what happens in the event of the owner’s death, disability, or sale of the business
- Succession planning — Identifies who will take control of the business, and how
- Tax planning and legal entities — Business owners face tax challenges on all sides. Tax planning is critical to protect your wealth.
Other Estate Planning Strategies
Business owners can also implement:
- Family Limited Partnerships — Help to decrease estate tax while giving the business owner control
- Grantor Retained Annuity Trusts (GRATs) — This is a strategy to pass growth in business value to the next generation
- Employee Stock Ownership Plans (ESOPs) — Sell business ownership to your employees and receive a tax break
Protecting Your Family AND Business Legacy
Too many business owners think there’s a choice between family and business.
This is false.
Protecting your family and business legacy don’t have to be separate.
Business Valuation Is the First Step
First and foremost, you need to know what your business is worth.
Without proper valuation, you won’t be able to make educated decisions on protecting your business.
Business owners should get valuations done every three years for insurance planning, tax planning, buy-sell agreements, and family financial planning.
Set Up Multiple Layers of Protection
Smart business owners know one tool isn’t enough.
Layers of protection for your business include:
- Insurance — Offers a cash cushion that can protect your family
- Legal entities — Helps to shield your assets from creditors
- Management systems — Ensures your business can operate without you
- Education — Passes on business knowledge to family members who may inherit the business.
Protect for Multiple Outcomes
Your estate plan should work, no matter what.
Business owners need to consider:
- Sudden death — You leave behind cash for your family to support you through the transition
- Long-term disability — Someone is ready and available to take over operations
- Planned retirement — Ownership is transitioned over a set period of time
- Business sale — Ownership of the business can be transferred to an outside party
Your Action Plan: Protect Your Business and Family
Nobody wants to think about estate planning.
But not planning for your death and possible disability is the last choice you want to make as a business owner.
The 3 First Steps to Protecting Your Business
You might be wondering. “Where the heck do I even start?”
Here is a simple action plan that every business owner can follow. Start with these three steps:
1. Get your business valued — You can’t protect what you don’t know
2. Review current estate planning documents — Chances are your current will and other documents are out of date and need to be revised
3. Work with the right team — This isn’t a do-it-yourself project
Don’t put off the estate planning process. Your plan needs to work for your business, no matter what.
The earlier you start, the better you can protect your family and company.
Winning The Asset Protection Game: Summary
Look, estate planning isn’t sexy.
But leaving your family with a time bomb isn’t sexy either.
Running a successful business takes time, patience, and knowledge.
Planning ahead for all aspects of your business can save you and your family major headaches down the road.
The good news is, business owners today have a lot of help. You don’t need to plan your estate on your own.
You have the knowledge and skill to create a successful business. You have the right resources to plan your estate properly.
Take the time to do both.
The bottom line? You’ve built a legacy.
Don’t let it all go to waste.