On behalf of Kadish & Anthony Law Group posted in Estate Planning For Business Owners on Friday, December 20, 2019.
If you’re a business owner who is doing their estate planning, consider that your business may be the best and most valuable asset you leave to them. With that in mind, it is very clear why this process requires such careful planning.
The key, financial experts note, is to shed some ideas about assets that many people hold. From a strict ownership and estate planning perspective, for instance, a home is an asset. It’s something you own. You can pass it on to the kids.
Now, that may be true if you own the house outright, but a house is actually a liability, financially speaking, for many people. It costs money. They have to pay the mortgage, the taxes, the insurance, the upkeep costs and much more.
Financially, the only things that are true assets are those that represent income. That’s where your business comes in. When you leave the house to someone, you may end up giving them a financial burden, not a windfall. When you leave them your business, you give them a future income and a valuable asset that can change their life.
That said, you do need to decide how it suits them best. Some business owners want to give the company to the children to run. Others, knowing their children cannot run the company or do not want to do so, simply sell the business and give the children the proceeds.
Either path can be successful. Just consider what your family needs and how to give them this valuable asset. Think about your legal options and the steps you need to take.