Entrepreneurship is as challenging as it is rewarding, and an entrepreneur has countless things to consider during any given day. However, one thing that can go overlooked but should not is estate planning. Even a young entrepreneur in good health should make formal plans if the unexpected worst happens, and they are left with no way to ensure their family can enjoy their success. Estate planning for entrepreneurs can also provide business partners and investors with security and peace of mind.
If you are starting a business or have already established yourself as an entrepreneur, consider your next steps carefully. It is wise to start thinking about your end-of-life preferences, especially if you have a family and business partners. The documents and plans you develop can offer them clarity if you fall ill, suffer an accident, or die unexpectedly.
Why Do I Need an Estate Plan?
It’s not uncommon for younger people under 40 to believe they do not need to consider estate planning yet. However, this is best handled sooner than later simply because the unexpected can happen at any time with little to no warning. A car accident, natural disaster, sudden illness, or even a violent attack may suddenly end one’s life, and an estate plan can provide their loved ones and business associates with guidance and clarity.
If you started your company with the help of a partner or partners, your company’s founders likely have an ownership agreement that could potentially translate to shareholdings. It’s wise for business partners to develop estate plans that apply to their partners. For example, an entrepreneur with a business partner could develop an estate plan that includes a living trust. This living trust can ensure the entrepreneur’s shares of their company remain their property while they are alive and competent but designate their partner to assume legal control over the trust’s contents should they die or become incapacitated.
This is just one example of how an estate plan can provide peace of mind to business owners, especially entrepreneurs starting new companies with significant untapped growth potential. It is also possible for co-owners of a business to create a basic shareholder agreement that would outline each shareholder’s rights and responsibilities, including what happens if they die. A shareholder agreement can designate the transfer of shareholder rights and compensation for a deceased shareholder’s family.
Insurance for Entrepreneurs
It’s not uncommon for people to acquire various types of insurance coverage, investment accounts, pensions, and other assets during the courses of their lives. When it comes to insurance beneficiaries and the designated beneficiaries of certain accounts and holdings, entrepreneurs can designate disbursements to their companies to provide additional liquidity. When a business loses a founding member or influential leader, the loss does not only create an ownership vacuum but also creates a loss of talent and leadership the company could have leveraged in the future.
Term life insurance can potentially provide a bit of helpful liquidity if a company needs to replace a deceased founder with a new partner of equal talents. Entrepreneurs with families should carefully construct their estate plans and then revisit these plans as their lifestyles change, their businesses grow, and their preferences for end-of-life affairs evolve. However, you must be careful about tracking the assets you acquire over time. Many of these will require you to assign beneficiaries. The estate plan you develop must match these designations to prevent disputes between your loved ones and/or business associates after your death.
Should I Hire an Attorney?
Whenever anyone develops an estate plan of any kind, they should consult an attorney, regardless of whether they own a business. Hiring an estate planning attorney to assist in the creation of your estate plan is an investment in peace of mind. Even the most fastidious business leaders may overlook key details when they attempt to develop their own estate plans without professional legal guidance. An attorney can ensure your estate plan is complete and enforceable and enforce the rights of your beneficiaries.
If you own a company, are building a new company, or have already established a brand with lots of forward momentum, your own estate plan could be one of the best investments you make into the future of the organization you have built. Your estate plan can offer peace of mind to your business partners and investors who have measurable stakes in the future growth of your company. Additionally, your estate plan will ensure your family can enjoy the fruits of your success if you are tragically unable to enjoy them yourself due to an unforeseeable accident.
The experienced estate planning attorneys at the Huber Fox, P.C. can provide experienced legal insights into your estate plan. Contact us to learn more about what an estate planning attorney can offer.
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