Small business owners are busy people—and turning the corner on the pandemic adds to the stress and hustle. Still, don’t forget to pause and put a plan in place for your hard-earned assets.
Start with The Basics
When you create a business, you are making your mark in your family, community, and maybe even your industry. Hoping one or more of your children will take an interest? Have you always thought your spouse or partner will step in if something happens to you? Intending to leave the assets to charity?
Without a plan, your wishes might not be known—or honored, and if you should die without a plan, state laws of intestate succession will govern what becomes of your legacy. So, if you have been putting off estate planning (aka “putting your affairs in order”), carve out a little time and get the basics in place: a will (or trust), a durable power of attorney and healthcare power of attorney. Depending on your circumstances, you may also want to designate guardians (for minors, elders, or disabled family members). Don’t forget to name an executor to administer your affairs when the time comes— and make sure that person understands your intentions—and where to find all the necessary documents.
Estate Planning Tips for Business Owners
Avoid making assumptions when you think about the future of your business. For example, don’t assume that your spouse could automatically take over—in some states this would require court approval. Legal experts advise establishing a succession plan for the business:
In many cases, a business owner’s fondest dream may be to transfer ownership to his or her children, who will continue to run the operation when the owner retires. A succession plan can provide a smooth transition of power and be used in the event of an unexpected death of an owner.
Typically, a succession plan will outline the structure of the business going forward and prepare for the eventual sale of the business. Make sure that the plan is memorialized in writing. Identify training opportunities and special compensation arrangements for your successors. One section of the plan should include all the financial details reflecting assets, liabilities and current value.
Coordinate your succession plan document with your will….
As with all plans, clarity of intent paves the way for the smoothest and timeliest transition of your business affairs when you die or in the event you become incapacitated. Make sure that your designated executor is comfortable with the responsibilities of administering your affairs. Once appointed, the executor has fiduciary responsibilities.
Although sometimes waived in the process of creating a will, fiduciary bonds can be requested by courts during the probate process. Variously referred to as administrator, estate, executor, or probate bonds, fiduciary bonds—essentially guarantee the faithful performance of the executor in accordance with applicable state laws.
It is easy to obtain all types of fiduciary bonds, instantly, digitally and affordably from leading, national provider, Colonial Surety Company. Just get a quote online, fill in your information, and enter a payment method. Print or e-file the bond from anywhere—even while in probate court. It’s that simple.
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Colonial’s Partnership Account® is a free, fully digital, business service that provides attorneys with a user-friendly client management system and dashboards. Coordinate, view, complete and e-file the court and fiduciary bonds clients need—all from Colonial’s innovative online platform.
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Founded in 1930, Colonial Surety Company is a direct writer of surety bonds and insurance products. Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA.