Generally speaking, the more assets an individual has the more detailed his or her estate plan needs to be. The same holds true when there are multiple heirs in play. While most people focus on divvying up their personal property, familial home, and bank and retirement accounts, others need to consider matters such as what to do with a business. If this matter isn’t appropriately addressed, a business can be susceptible to poor ownership and management.
This is why succession planning can sometimes prove beneficial during the estate planning process. Through succession planning, an individual can name who will take over a business in the event of death, thereby ensuring that the business continues to run smoothly. Engaging in this practice forces an individual to carefully consider who is best to take ownership of a business through careful analysis of skills and talents.
Of course, exactly how succession will be accounted for depends on the circumstances at hand. A sole proprietorship may be left to an heir or multiple heirs, while a partnership may be dealt with through an insurance policy. In the latter scenario, an individual obtains a life insurance policy that names the other partner as a beneficiary. Therefore, if the policy holder passes away, the other partner can obtain the funds necessary to purchase the other half of the business.
When businesses become a part of estate planning, careful attention to detail must be undertaken. Those who own a business certainly shouldn’t hesitate to create a strategy to ensure that their business and their loved ones are taken care of in the event of death. Legal professionals who are skilled at estate planning can assist these individuals with all of their estate planning needs.