Entrepreneurs have unique personal and business-related planning challenges. An entrepreneur must create an individual estate plan as well as think about the possibility for succession planning, which outlines what happens to the business if they need to make a sudden exit.
Because of the many factors involved in estate planning and succession planning, it can be very dangerous for entrepreneurs to rely only on a will.
A will is a crucial component of most estate plans since it outlines how someone’s assets will be distributed after they pass away. However, many unintended consequences may arise as a result of relying only on a will including:
• Unintended tax consequences, such as taxes owed for estate and income purposes.
• Limited control over asset distribution, since wills cannot be used for all estate planning purposes, like protecting assets from creditors after your death or helping with a disabled child.
• A will requires the probate process which can be expensive, frustrating, public and time consuming, which can mean that an entrepreneur’s assets are tied up for months or even years.
• A lack of privacy, which means that anyone can see how your assets are being distributed.
You get peace of mind in knowing that your business can continue effectively if you need to leave the company intentionally or as a result of an unexpected issue.
Your succession plan likely operates on its own, but also connects to any potential individual estate plan.
A comprehensive estate plan for an entrepreneur includes consideration of their personal and professional assets and business succession plan. It is critical to identify an attorney who has experience in both of these areas of the law. Contact our California business succession planning law office for further assistance.
