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Planning your estate as a small business owner

It's always better to start planning your estate sooner rather than later. However, as long as you are considered to be mentally competent, you can plan your estate at any time in your life. If you have a small or medium-sized business, it is a good idea that you consider planning your estate as soon as possible, because your situation is likely to be more complex than most.

Believe it or not, it can take as long as 10 years to adequately plan a more complex estate involving a family business. So if you want to ensure that your legacy lives on after you pass away, you should start considering who you want to be listed as your beneficiaries, and what assets you want them to acquire. The following are four things that you should consider when planning your estate.

Is your child really ready to take over your family business?

For many people, their legacy will involve either what they do in their professional lives or what they do in their personal lives. For a small number of individuals, those two legacies may eventually overlap.

If you have created or at least managed the family business through most of your adult life, you likely have an intense sense of pride stemming from the success and growth of that business. You want to pass the business on to someone you love so that your business can provide for your family in the future and your family can know the joy that comes from running a successful company.

Steps you can take now to protect your estate from challenges

Creating an estate plan or a last will gives you control over what happens with your assets when you die. The same process also helps provide you with peace of mind by making it easier for you to know that your family will have the resources they need when you die.

You will probably put a lot of careful thought into who gets what and why. If you have a trust as part of your estate plan, you may even choose to put rules in place about when a beneficiary accesses those assets and how much they can withdraw at any given time. You can prevent people from using estate assets wastefully or while they are too young to appreciate their value.

Growing your business can mean changing employee positions

It is common for people who start a small business to initially perform the vast majority of work on their own. When you start developing a reputation for excellence, people will begin to seek you out, eventually leading to higher numbers of clients or customers, which means you may not be able to do everything on your own anymore.

It is a testament to your determination and commitment to the business that you could grow it to the point where you would require help with daily tasks. It is likely that you hired someone you already knew or had a previously existing professional relationship with. Quite a few businesses initially hire new staff through informal arrangements.

Important considerations if you start a business with your spouse

You and your spouse trust and respect one another, so it's no surprise that you might think of your spouse as the ideal candidate for a business partner. While you may work well together as spouses, it's important to consider how a business partnership could impact your family life and vice versa.

You need to make certain you have your own space, as well as plans for handling the conflicts that will inevitably arise. With a little planning and foresight, it may be possible for you to successfully start a business with your spouse, provided that you address some key issues as soon as possible.

Treat the end of a business partnership like an amicable divorce

Taking on a business partner is quite a bit like getting married. You pool your resources and work jointly for a specific goal, probably spending a lot of time together in the process. The business that you build up is a lot like the children you could share with a spouse. It is something that you both love, work hard for and have pride in.

Still, like any relationship, it is possible for a business partnership to falter and fail. Sometimes, business partners grow apart over time. It is also possible for there to be a breach of trust or a divergence of wishes between the partners that leads to problems in the relationship and then in the business. Maybe one of you falls ill or needs to move across the country.

How do you transfer your family home into a trust?

There are many reasons that people want to create a trust and fund it with their home. Maybe you work in a risky profession and worry about the potential for a lawsuit that could leave your family vulnerable if someone comes after your personal assets. Perhaps it is part of a broader estate planning strategy to mitigate estate taxes and reduce the risk of your heirs abusing the assets you leave behind. There are many potential benefits to such a transfer.

Regardless of why you have decided to transfer your Pennsylvania home into a trust, you need to make sure that you do so properly. As with any estate planning or real estate efforts, it is almost always beneficial to seek legal counsel throughout the process to avoid making mistakes that could lead you and other people you care about financially and legally vulnerable.

Succession planning is a critical step for business owners

Many people begin their own business because they want to provide a good standard of living for their families. That motivation is why responsible adults also create an estate plan to ensure the smooth transition of their assets in the event that they become incapacitated or die.

All too often, business owners planning their estates overlook succession planning for their business as part of their comprehensive estate plan. Succession planning involves creating a legal framework for someone to take over your role and an explanation of the duties that they must fulfill.

Have you considered creating a living trust?

There are many ways to control how your property is managed and distributed upon your death. While a will is a popular estate planning tool, you may want to consider combining it with the power of a living trust.

There are many benefits of a living trust, including:

  • Avoid probate: If you only have a will, your assets are required to go through probate before reaching your heirs. With a living trust, however, the assets in the trust are not subject to probate. This allows for a more efficient transfer of property.
  • Important for incapacity planning: There is more to an estate plan that what happens upon your death. You must also have a plan for protecting yourself in the event of incapacity. With a living trust in place, your trustee can step in to manage your affairs.
  • Privacy protection: Do you have concerns about you privacy once you're gone? A will is public record, which allows anyone and everyone to review your assets and where they ended up. A living trust is not public record, thus allowing you to distribute your assets with complete privacy.
  • More control over your estate: For example, maybe you want to leave assets to a child who may have difficulty managing money early in their life. With a living trust, you can designate that they don't receive their inheritance until they reach a specific age or milestone (such as graduating college).
  • Easy to create: A living trust is more detailed than a will, but with the help of a Philadelphia estate planning attorney it's easy to create. Furthermore, with a revocable living trust, you can make adjustments as necessary in the future.

Why digital estate planning is more important than ever

Almost all of us have some form of digital footprint. This means that some of our personal data, ranging from administrative data to nostalgic memories, is stored online. We should be able to decide what happens to all of this data at the end of our lives, and in order to do this, we will need to address it on our estate plan.

There are many reasons why making a digital estate plan is so important. However, many people do not understand the full extent to which planning digital asset management can help their beneficiaries. The following are just some of the reasons why you should consider investing time in creating a digital estate plan in Pennsylvania.

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