Posted by JuJuan Buford @JSBUFORD
Estate Planning 101 Overview. Click the pic to learn.
IF YOU ARE A BUSINESS OWNER OR YOU OWN REAL ESTATE
WHAT CAN HAPPEN IF YOU DON'T HAVE AN ESTATE PLAN?
1. YOUR BUSINESS OR ASSETS COULD END UP IN PROBATE COURT
During probate, the court oversees your will’s administration to ensure your assets (including your business and or real estate holdings) are distributed according to your wishes. However, probate often takes months to complete and can be extremely costly for your heirs—both of which can seriously disrupt your business operations and even lead to your company’s ruin.
In other words, your business and other assets will be held in limbo, and if you need important decisions, transactions, or other important affairs to be handled there is a good chance your affairs won't be executed. Your family or business partners may know how to operate your business and assets, but their hands will be effectively tied. And perhaps worst of all, probate is a public process, leaving your business affairs open to whoever wants to know what’s going on.
All the aforementioned means paying additional expenses to access your assets, and it opens to door for others to try to disinherit your family and business partners. The confusion may also inspire or prompt other family members to cause conflict, further depleting your business or real estate holdings.
2. IF YOU ARE INCAPACITATED OR UNCONSCIOUS, OTHER PEOPLE NOT OF YOUR CHOOSING, CAN DETERMINE HOW YOUR CARED FOR, AND MANAGE YOUR BUSINESS AFFAIRS
Gasp!! There shouldn't need to be much more said here.
The court will appoint a “financial guardian,” sometimes called a conservator, to assume control of your assets. What is the likelihood that they'll operate your business or affairs like you intended? What kind of conflicts might arise between family members, your business team, employees, and your clients (yes your clients and tenants will find out that you're missing in action).
When you return, it may be to a pile of rubble. Who is determining compensation, how to handle disagreements, or promotions? Who is going to execute your road map?
3. ABSENT AN ESTATE PLAN, KISS YOUR DREAMS OF GENERATIONAL WEALTH AND LIFTING AS YOU CLIMB GOODBYE
As an entrepreneur, most of your time, monies, and financial well being, and wealth is likely tied up in your business; especially if you're a start up, or first generation business owner. If an estate plan and business succession plan is not implemented, how is the business to be transitioned properly to the next generation, or at the least sold for a fair price that enriches the family.
Questions that need to be answered
1. What family members or children are best equipped to actually manage and own, operate, and build the business. Each one of these elements are skilled trade.
2. How do you make other family members whole (keep them from being disgruntled) who are not included in the ownership, operation, and building of the business?
3. What are the guiding principles or management philosophy regarding the management of your business and or real estate holdings (rent, buy and sell, fix and flip, etc., etc., etc.......)
4. Or maybe, it would be best to set up some type of arrangement whereas an employee, member of the leadership team, or an outsider manages, operates, and builds the business, and the family is compensated for a period of time.
Often physicians, accountants, financial agency owners, attorneys, real estate investors, engineers, construction professionals, accountants, architects, and other service and technical assistance providers choose to operate their businesses under the owner-dependent model, as do many general contractors, local restaurant owners and countless other businesses. Owner-dependent, meaning every or almost every critical decision is made by you, the owner.
When the owner dies, the family is finally thrust into making business decisions (assuming it survives probate court) like continuing liability coverage. Did you have buy-sell agreements, key person obligations, and other financial arrangements to insure a cash infusion is made into the business to acquire the expertise, talent, and experience that no longer exists with the owner's passing? How about estate taxes?
Learn what happens when people die without having accounted for estate taxes.
What's next? The best time to learn, plan, make decisions, and implement estate planning decisions is before you die.
Set an appointment today. Worried about the expense? Don't be.
Learn more about estate planning, and how we help you acquire big business resources for your small business dollars, and protect what matters most today.
#entrepreneurshipisempowerment
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JuJuan Buford is a Detroit native, entrepreneur, business development professional, and writer dedicated to helping families, entrepreneurs, and business owners establish thriving enterprises, achieve financial independence, and build lives of satisfaction.
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