How to protect your business in your estate plan: Avoid these mistakes

Not all business owners understand the benefit of having a well-drafted estate plan. Unfortunately, if your estate plan does not properly address potential issues that may arise or if you fail to have a plan altogether, your business could be at risk.

Your estate plan should protect your business in addition to protecting your wishes and preserving your assets. Your plan needs to be tailored to your specific situation. This is especially true when you own and operate a business. Because of this, it is paramount that you work with an experienced attorney to ensure your issues are addressed so you can prevent disputes and problems down the road.

Avoid common mistakes in your estate plan

Your estate plan should address how your business will be impacted after certain events and will need to be reviewed and revised accordingly as the business changes. However, understanding some of the most common mistakes can help you avoid the same pitfalls and create a plan that works for you and your business.

Some of the most common mistakes when it comes to estate planning when you own a business include:

  • Not revising your estate plan after a major life event: Do not forget to review and make updates to your will and other estate planning documents after getting married, divorced, having children or losing a close family member or loved one.
  • Not updating your beneficiaries: Your beneficiary designations play a significant role in how your assets will be transferred. Do not forget to review and update your designations as life changes, and make sure they match up with what you have stated in your estate plan so there is no confusion.
  • Not setting stipulations for minor heirs: Minors and young adults may not handle their inheritance as you wish they would. The good news is that you can include certain requirements in your estate plan to ensure your heirs are taken care of while still maintaining some control over their inheritance instead of giving them a lump sum.
  • Not including specific information about what should happen to your business or assets: It is important to think about how you would want your assets and your business managed in the event you are incapacitated or after you pass away. This is an important step to take during estate planning because it will help you create a better legacy for your company by planning early and making revisions as necessary.

You may not be able to anticipate every issue that your business will run into. However, you can take steps to make sure your estate plan protects your business by avoiding these common mistakes and working carefully with your lawyer to have an estate plan that addresses your specific needs and concerns.

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