Estate planning is, in part, the process of passing assets to your heirs. You need to create a plan to do this effectively. Common assets include the family home, a life insurance policy, your investment portfolio, your bank accounts and the minor assets at your home, from your art collection to your car.
If you’re a business owner, though, you’re well aware that your largest asset is your business. It generates income and creates wealth. It also contains assets that, if sold or liquidated, could be worth millions. For many business owners, all of the rest of their assets are not worth as much as the business.
So, should you leave that business to your heirs? Possibly.
With most estate planning questions, it is wise to talk to your family and ask them what they want. It may not be what you assume. You may think your child would excel at running your company, but they like the job they have and are not interested in the business. If you leave it to them, they just have to sell it. You can save a lot of steps by selling it yourself and leaving them the money.
If they do want it, it’s best to know this as far in advance as possible so that you can begin doing business succession planning. For the health of the company, passing a business on is far more complex than just leaving it to them like any other asset. You need to guide the way and help make that transition over time.
No matter what your family wants and what you decide to do, be sure you know what steps to take. It can be difficult to plan for the future — especially one that doesn’t include yourself. You may want to speak to someone with legal experience about your options.