A Publication of WTVP

For the business owner, estate planning can be especially tricky. Not only is it hard to simply carve out time to deal with the issue, but there are many pitfalls to consider.

You want to be fair to all your kids? What if only one child is interested in taking the reins of the business? How do you provide for your spouse and your offspring when most of your wealth is tied up in the entity you’ve worked so hard to build? Perhaps because of these complexities, only about a third of family-owned businesses in the U.S. survive to the second generation, according to the Small Business Administration.

Procrastination is the enemy in these cases, because when you don’t have a clear estate plan, your business could be damaged beyond repair when you die. As Benjamin Franklin said, “By failing to prepare you are preparing to fail.” But the good news is that estate planning for the business owner is just like any other business process—there are a series of steps to follow. Here are some of the most important steps and strategies that I’ve seen work.

The Short Term

Even if you’ve put off estate planning, start now by taking a short-term view. Who would step in to take care of you and your business if something happened to you tomorrow? Would your wishes be carried out? Would your customers get their orders fast enough?

To do:

The Long Term

When you’ve got the contingency plan in place, pat yourself on the back, but don’t stop. Now, the challenge is to plan for many, many years of good health, success and a smooth transition to the family members who want to take on the business. One of the most important considerations in long-term planning is to lessen the tax burden for your heirs.

To do:

Finally, keep the lines of communication open with everyone involved. Though it may be awkward and difficult at times, talk about estate planning with your family. If they’re going to be involved in the transition, then they need to be involved in the planning. TPW