Owning a small business isn’t easy, as you have so many things on your mind every day, all of which are fighting for your attention. It may be hard to think of the future when you are working hard to be successful as each day comes. Yet, having an up-to-date estate plan is absolutely necessary. Planning your estate for the eventuality you can no longer run the business is key, as it will enable the business you have worked so hard on to be passed into the right hands. After a long and detailed conversation with a financial advisor and a solicitor, you will have your estate in place. Before this takes place, have a read of some of the things you need to know to create a successful estate plan.
Create a Will and Basic Estate Plan
With the help of will writing solicitors Manchester based, in London, or wherever you are, there are three main documents you must have in place. Firstly, you need a will that states your wishes about how your business and property should be divided. You will also need a power of attorney which gives someone else the power to manage your finances and complete transactions in the event of you not being able to, and finally a healthcare directive, which appoints another person to make medical decisions for you in the event you cannot. Your lawyer will give you far more information about these documents, as well as deeper things you will need to talk through, but this is a starting point.
Plan for Tax
There are strict laws in place when it comes to estates, in that the government levies estate tax which is taken off the total that your beneficiaries will receive. If your estate is worth less than £325,000, there’s normally no inheritance tax, and if you leave the entire estate to your spouse, civil partner, a charity or a community amateur sports club, it is also unlikely that you will be taxed. The standard inheritance tax rate in the UK is 40% of anything above the tax-free threshold. With good estate planning, you can minimise the inheritance tax. An experienced state planning lawyer will be able to help you with this.
Apply for Life Insurance
Having some sort of life insurance in place as a precaution in the eventuality you do pass away is vital, as it will provide the business with an income to continue in your absence and rethink the structure of the business. There are so many different options for life insurance, so discuss the best options with your lawyer and financial advisor.
Create a Succession Plan
Now that most of the legal business is out the way, you will need to create a succession plan. Unlike a will, which specified who is entitled to your estate, a succession plan specifies how your company would prepare for a change in ownership. The focus is around how to keep your business running with background information, information about audiences as well as competitors. It will state how you think the business should be structured in your absence, and will perhaps outline the current financial state of the business, as well as where you want it to head. It would be a good idea to discuss this with the affected parties to make sure everyone is clear with the plans. Without this, there could be confusion, so hold a meeting to explain to anyone involved what would happen in your absence.
Keep it Up to Date
Now that you have everything in place, it is important to keep your documents up to date, as well as ensuring that they are all succinct. For your business to have the best chance of success in your absence, you will know the best people to leave it to, so ensuring your documents are correct and up to date is vital.