The overall purpose of any estate plan is to protect you, your loved ones and your assets both while you are alive and after you are gone. Protecting your assets can become a bit more complicated when you own a business; however, if you own a business it is also even more important that you have a comprehensive estate plan in place that includes your business. As a business owner, you should consider business planning services an essential part of your estate plan both now and for as long as you own the business. The best way to ensure that you understand how business succession planning services can help you is to work closely with an experienced North Dakota estate planning attorney during the creation of your estate plan. In the meantime, however, it may be beneficial to learn some basics about business succession planning services.
The Need to Plan for Your Business
For many people, owning their own business remains part of the “American Dream.” If you are one of those people, and you have worked hard to make that dream come true, you don’t want to risk losing it all because of your own incapacity or during the transition to the next generation. Small business owners are often so caught up in the day to day operation of the business that they have little time to think about the future, much less about what could happen to the business if something happened to them. If this describes you, take a few minutes and think about the answers to the following questions:
- Who would take over for you if you were suddenly incapacitated because of a tragic accident or serious illness?
- Who would step in and run the business if you died tomorrow?
- Does the business have sufficient liquid assets to survive the transition to the next generation?
- Does the next generation even want to carry on the business?
- Do you have a plan in place to sell your interest in the business in the event your children/grandchildren have no interest in taking over for you when you can no longer run the business?
- Have you chosen a successor? If so, will that choice result in conflict among your other heirs?
- Is the business protected from creditors and/or other potential threats to the business assets?
Like most small business owners, you likely don’t know the answer to many of those questions. Not having an answer, however, can put your business at risk. That is precisely why you need to include business succession planning in your overall estate plan.
What Are Business Planning Services?
Business planning services is a term used to describe a wide range of tools and strategies used to ensure that your business survives if something happens to you and/or that your family receives the fair market value of your business if survival is not an option or is not desired. As such, one of the first things you will need to do when creating a business succession plan is to decide whether or not you wish to try and ensure the survival of your business when you retire, become incapacitated or die. Do you have children or other family members who want to take over the business? If so, you need to start structuring the business in a way that brings your chosen successor(s) into the business slowly over time. A Family Limited Partnership, for example, might be created to facilitate both the day to day and the legal transfer of the business to the next generation a little at a time.
If there is no one who is willing and/or able to take over the business, you need to focus on making sure that you and/or your loved ones are fairly compensated for the business when you step down or are no longer capable of running the business. You might, for example, execute a buy-sell agreement which will allow you the security of knowing ahead of time who will purchase your interest in the business and at what price.
For additional information, please join us for one of our upcoming free seminars. If you have additional questions about business planning services in North Dakota, contact the experienced estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.