There are an estimated 23 million small businesses1 throughout the United States and our economy and job market in part depends upon the success of the businesses. If you own your own business, you not only want the company to thrive while you are alive, but also likely after your death. While all of us dream of retiring and effectively passing on the family business to the next generation, unfortunately many people do you not get the opportunity to do so. If you suddenly fall ill, get in an accident, or pass away without a clear plan for your small business, all of your hard work may be in jeopardy. For this reason, you should always address business succession as part of your estate plan.
Durable Power of Attorney
First, you should always set out a durable power of attorney that gives a particular individual the authority to make decisions and run your business on your behalf should you become incapacitated. This power of attorney will have to handle your everyday business affairs, vote your shares if you have a corporation, and much more, so you always want to appoint someone who has a clear understanding of how to run the business. Having a will alone will not provide this authority, so you want to make sure the proper document is drafted.
Who inherits the business?
Though many owners wish to pass on their business to the next generation, this may not always be possible or practical. Your last will and testament should specifically dictate whether your spouse, children, or another individual will inherit your business interests.
What information do they need to run the business?
Though few business ownership transfers are completely seamless, it may be substantially more complicated for your family members to take over if they do not have all of the necessary information to do so. While a lot of this information may seem basic to you, it can significantly help a smooth transition occur. Such information should include:
- Names of customers and account information
- Procedures for charging and billing
- Delivery schedules
- Where the assets of the company are located and how to access them
- Location of all business records
- Lists of accounts payable and vendors
- Names and contact information of any advisers, such as your accountant or attorney
- Procedures for the main functions of your business
Having a thorough contingency plan can help for the most successful transition for both your business and surviving family members.
If you have any questions or concerns about wills, trusts, estates, or probate, call an experienced probate lawyer at the Dickson Frohlich in Seattle or Tacoma at (206) 621-1110 or (253) 572-1000 today.