Protecting Your Business Interests Way After You Pass On
People don’t like speaking about death. It’s a taboo subject. But if there’s one thing that entrepreneurs know it’s that life will shock you. Life will throw curveballs at you at the most inopportune time. If you are setting up measures to protect your business and ensure that it will stay afloat during this pandemic, why wouldn’t you do the same for after you pass away? These past six months should’ve taught us that life is fleeting, and we must always have our affairs in order.
Your business is no different. Whatever state it is in right now, you grew it from the ground. You toiled for it. For the past years, you’ve had to sacrifice relationships, personal time, and money to get your business to where it is today. Why should you not prioritize it’s future when and if you pass on suddenly? What are the steps you should take right now?
Whether you own the business yourself or you’re in a partnership or corporation, it’s still smart to leave a will so your beneficiaries will know what to do with your assets and liabilities. In a sole proprietorship, you can leave the management of the business to your beneficiary. Or, your estate will liquidate the assets of the business, pay off the business debts, and give the remaining to your beneficiaries.
In a corporation, your estate will be the owner of your shares. If you are the sole shareholder of the company, the new owner of the business will be your estate. Depending on your will, your beneficiaries can sell the shares to the new business owner. The profits will go to your beneficiaries. Or, the shares themselves will go to your beneficiaries as written on your will.
It’s often hard to talk about dying or leaving whatever business problems you have to your beneficiaries. But, that’s not a reason to avoid this topic and let your beneficiaries and business suffer. The great thing about planning for these things is the peace of mind that comes with it. When you know that you’ve done your part in making sure your family and business are protected, you’ll be more at ease.
Consider a Trust
You can set up a business trust where a trust management company will manage the operation and assets of your business on behalf of the beneficiaries. It works like an estate trust wherein the trustee will hold the legal title of the properties for a period of time until the beneficiaries meet the conditions of the trust. For a business trust to work, you need to prove that you are operating a legitimate business. Once the business trust is over, the ownership of the business will be transferred to the beneficiaries. This is the best way to protect your business from going bankrupt especially if your beneficiaries don’t know how to handle or run it. Many business owners with minor children entrust their businesses to a trustee until such time their children prove that they can operate it by themselves.Write a Will
Whether you own the business yourself or you’re in a partnership or corporation, it’s still smart to leave a will so your beneficiaries will know what to do with your assets and liabilities. In a sole proprietorship, you can leave the management of the business to your beneficiary. Or, your estate will liquidate the assets of the business, pay off the business debts, and give the remaining to your beneficiaries.
In a corporation, your estate will be the owner of your shares. If you are the sole shareholder of the company, the new owner of the business will be your estate. Depending on your will, your beneficiaries can sell the shares to the new business owner. The profits will go to your beneficiaries. Or, the shares themselves will go to your beneficiaries as written on your will.
It’s often hard to talk about dying or leaving whatever business problems you have to your beneficiaries. But, that’s not a reason to avoid this topic and let your beneficiaries and business suffer. The great thing about planning for these things is the peace of mind that comes with it. When you know that you’ve done your part in making sure your family and business are protected, you’ll be more at ease.