Frequently Asked Questions About Business Succession
You have worked hard to build your business. Now, it is time to position it for success well into the future.
Creating a comprehensive plan for your family-owned business can protect its value when you are no longer available to lead. Our attentive lawyers at Scott + Hespen Law, PLLC, can answer any questions you have about safeguarding your business in Minnesota.
What business matters should I account for in an estate plan?
If you are a small business owner, your estate plan will require a few unique considerations. To begin the process, you can create a business succession plan and specify your successor within your will.
You may also seek to protect your business from estate taxes and creditors by placing its assets in a trust. A trust can prevent creditors from seizing business assets to pay for any outstanding personal loans or debts you may have. However, the right estate planning strategy for you will depend on your specific business assets and concerns.
How can I protect the future of my business?
There are several ways to reduce the risks that your business might face in the future. For example, naming your successor ahead of retirement or end of life can allow you to prepare them — and your company — for the eventual transition.
When you are unable to make business decisions, it is important that you can rely on someone you trust to manage the company. One option is to grant financial power of attorney to a person who can then oversee business transactions if you become incapacitated. This person becomes a fiduciary who, therefore, has a legal obligation to act in the best interests of your company during your time of need.
The structure of your business is also a critical factor. Depending on your situation, a limited partnership could offer important benefits. As a limited partner, you would not face personal liability for the company’s debts. As a general partner, you could own the business with a limited partner, but you would have sole control over managing the business.
What if I want to dissolve my business?
Family-owned businesses typically hold a significant percentage of the family’s overall wealth. If you would like to dissolve your business, make sure that you preserve its value and that your family has financial protection during the process.
One option that you can consider is placing your business assets in a living trust. A trust can allow you to pass ownership during your lifetime, and it can also reduce estate taxes upon death. No matter which choices you make, speak to an estate planning attorney before forming your plan to review any potential risks or missed opportunities.