One of the most important things that you can do is plan for the future of your estate. This process makes it possible to manage the way the money and business will be handled when you aren’t around to make decisions. Many people are too caught up in the current moment to focus on the future, resulting in a situation that causes the business to fall apart after they leave. Here are a few things that you can do to effectively plan your estate and succession:
1. Be Careful with the Equity of Your Company
When you are making decisions about giving away the equity in your company, be smart about the people that receive that equity. It is common for businesses to offer equity as incentives for employees, and this can be a good strategy to help people feel a responsibility for the success of the company. But, you need to retain the right amount of voting shares so that you still have control over the company.
2. Create a Written Succession Plan
Have a written plan in place that outlines the details that are needed to have the company handed down to the right people. The business succession plan should include information about who the successors should be, training and development they need to receive, and the delegation of authority and responsibility.
3. Put Together a Contingency Plan
Even if you have the best plan written down, sometimes things can go wrong. Make sure to think about contingencies, and put together a back-up plan that can be used in case problems arise. Designate a trusted peer, staff member, or partner who can take over if you are no longer around to help.
4. Make sure that Confidential Information is Protected
Bringing in new leaders for your company is important, but you need to be cautious about the way the business information is distributed. Have everyone involved sign a confidentiality agreement to protect business trade secrets or other information that needs to be kept private. This step keeps your business protected and it prevents those new people from taking the information to a competing company.
5. Hire a Tax and Estate Planning Expert
When money starts to change hands because of the way your estate is setup, you want to make sure that you are minimizing the amount of tax liability that is owed. Setting up the estate in the wrong way might result in a big tax burden on your family or the recipients of the money. So, it is a good idea to hire an experienced estate planner who can help you be strategic for tax reasons, according to a bankruptcy lawyer.
6. Have a Good Insurance Plan in Place
There are many types of insurance plans that you might consider, and some of these insurance policies can be paid out in the situation where a business owner is no longer able to manage their company. This type of insurance coverage allows you to have the funds and resources that might be needed for any unknown expenses that might pop up during the succession.
Plan for Your Retirement
You need to make sure that your business will be cared for after you leave, and it is also important to ensure that you and your family is cared for as well. Do you have a good retirement strategy in place to protect your finances after you leave the company? Talking with a financial planner can be an effective way to make sure that you have enough money available to enjoy your retirement.
If you are interested in learning more about estate and succession planning, contact an accountant to put together an effective plan for your individual situation.