We make mistakes, as people that fact is one of our defining characteristics. The secret to being successful is: (1) learning from your mistakes to ensure you don’t make the same one twice, and (2) learning from other people’s mistakes so you don’t have to make the same one once. Over the next few weeks, we will be looking at the top 10 mistakes that people make with estate planning in the hopes that we can support each other to learn from the mistakes of others, so they stay ONLY the mistakes of others.
Top Estate Planning Mistake #10: Not Planning for Your Business
When starting a business, I was told that there isn’t a lot of different between a newborn business and a newborn baby. It didn’t take me long to understand what was meant, and I bet every entrepreneur reading this post is head nodding thinking back to startup. My business started as a whining, sometimes smelly, little nothing that grew into a real accomplishment. It took up way more of my time than I could have ever imagined. It required sacrifice and work. It grew as a result of the care I gave it and in the shape of the discipline I provided. Starting my business was a lot like having a newborn baby. That is one of the reasons I am frustrated when people discuss their estate plans with me and they haven’t even considered the Business baby”.
Estate Planning isn’t just about determining the ownership of your property when you die. Estate Planning is about securing your legacy. It is about taking care of the people you care about and making sure that you have left the imprint on your world you deserve. Your business is a big part of that imprint.
First, it is property that generates substantial revenue. For most folks who own a business, the business is, and probably has been, their major source of income for years. Receiving a successful business, and the income it generates, can be a life changing experience. Second, The way your business is run is likely to have an enormous amount of influence on the way you are remembered. The men who built the railroads across this nation left way more than just a revenue generator to their successors. Alternatively, those who inherit Bernard L. Madoff Investment Securities, LLC may have a tough row to hoe in regards to regaining public goodwill.
Planning what will happen to your business when you pass is not only important, but can often be very complicated. Have you reviewed the articles that form your business to understand who can inherit your ownership interest? Are there any restrictions on ownership requiring special licensure from the government? Can the person who inherits your ownership interest sell that interest later on? Do the rules of your business require it to be closed and wound up upon the death of an owner?
When you expect your “business baby” to provide for your actual babies, especially after you are no longer there to ensure smooth sailing, guessing everything will work out isn’t an option. Business succession, as with many of the facets of your business, failing to plan is planning to fail. Don’t plan to fail, discuss your business succession needs with someone who has the expertise to advise you today!