Business owners spend a significant amount of time and money on building up a successful company. And the last thing that most entrepreneurs want is to see their company become a pawn in a family feud or just another probate problem.
Luckily, there are ways to help your business stay out of a lengthy probate battle and remain in trustworthy hands.
Trusts
Trusts are incredibly useful tools for business owners if they are used correctly. In most cases, owners will need to choose between a revocable or an irrevocable trust. Both trusts allow you to avoid probate court but operate differently.
A revocable trust allows you to maintain control of your company, but you must deal with estate taxation. In contrast, an irrevocable trust avoids tax but asks you to release control of the business to a trustee.
Wills
Like trusts, owners can draft wills to avoid probate disputes among beneficiaries. However, wills are more detailed than trusts; they set up as proper instructions that must be legally executed. You may determine who runs your company or what happens to your company after you’re gone.
If there is no will, it’s up to the state to determine who receives shares in your business, who will run your business and how to pay off any debt related to your business. It’s best to craft a will and designate an executor who will make sure that everything follows your wishes.
A business continuation plan
Along with a will or trust, a critical step is setting up a predetermined plan for the company after you retire or pass. The plan may include details such as paying off debts, employees’ salaries, operational information and the company’s successor. However, owners need to know how to fund the plan beforehand.
Most owners sacrifice a significant amount of time and money to make their companies successful, but that sacrifice does not need to go to waste. Take the time to decide what the future of your business looks like after you leave.
