You’re a business owner and are likely juggling dozens of responsibilities daily. Managing operations, keeping employees happy, and staying ahead of your competitors, all in a day’s work. However, there’s one crucial task you shouldn’t ignore: estate planning for your commercial properties.
Estate planning is not really the most exciting thing in the world. That being said, it’s a vital part of your journey as a business owner. After all, making sure your business assets are protected after you’re gone is one of the smartest moves you can make.
Today, we’ll share a few tips that will help you feel secure about your business’s future, even when you’re no longer at the helm.
Start Planning Early
No one actually wants to think about what happens after they’re gone, especially when you’re busy focusing on your business right now. What happens when you’re no longer can be a problem for those who will take over after you.
However, this is why it’s an absolute must that you start your estate planning early. That’s because you want to avoid unnecessary headaches and chaos down the road. Think of it as securing the ultimate insurance plan for your business’s success.
The earlier you set up a solid estate plan, the better. Many financial advisors recommend starting an estate plan as soon as you become a legal adult. After that, it should be updated every three to five years.
Early planning gives you more control over how your commercial properties are handled and how the transition will work once you’re no longer there.
That being said, if you have the skills and knowledge and can prepare the will yourself, it will cost you just $80. However, this can get tedious, especially if you already have a ton of work to take care of as a business owner.
You can get some attorneys to prepare the will or power of attorney for just $150 to $200. However, experienced attorneys, especially those specializing in estate planning matters, can charge you between $250 and $350 per hour. They, of course, will help you out with the more sophisticated estate plans.
Lady Bird Deeds
Lady bird deeds? What on earth are they?
Talks about these deeds often pop up in law school, but they are more than just property-related legal jargon. Ladybird deeds are pretty powerful tools for property owners. They are especially vital to understand if you want to avoid probate and still maintain control over your commercial properties while you’re alive.
According to the Law Offices of David Djebelli, P.A., a ladybird deed gives you full control of your property during your lifetime. You can sell it, mortgage it, or do anything else with it as if no one else had an interest in it.
When you pass, the property automatically transfers to your chosen beneficiary without going through probate. The best part about such a deed? It’s simple, straightforward, and can help ease your family’s burden during an already emotional time.
Now, not all US states have provisions for ladybird deeds. For instance, Florida allows these deeds, but Washington does not. Then, what is a ladybird deed in Florida? In Florida, this legal deed transfers property upon death inexpensively and without any need for probate. As you get to learn more about these ladybird deeds, you’ll realize they function the same wherever they are accepted.
Plan for Business Succession
Who’s going to take over when you’re no longer running the show? A worry for another person, someone that’s not you? Sure, but do you really want your top executives and family members to get into arguments over your business succession plan? We doubt you do.
Therefore, never brush your business succession plan off with a casual ‘no.’ Think things through cause it’s crucial for ensuring your company’s continued success.
Your son, daughter, maybe wife or husband. Who takes over? Perhaps you don’t want any of them to have executive authority but want them posing as figureheads. See how the succession plan can get complicated? It’s getting complicated just to think about when you’re still here; imagine the scenes when you’re not in the picture. Scary, right?
Business succession planning isn’t a one-size-fits-all deal. Some owners sell to third parties, others pass their businesses down to family members, and some even transition ownership to employees.
Frequently Asked Questions (FAQs)
What details are included in a business succession plan?
A business succession plan includes details like the identification of successors, the process for transferring ownership, the valuation of the business, and contingency plans. It may also outline roles and responsibilities for the successors and strategies for minimizing tax implications during the transition.
How do you create a business succession plan?
To create a business succession plan, start by identifying potential successors and defining their roles. Assess the business’s value and establish a strategy for transferring ownership, which may involve selling shares or gifting assets.
It’s also essential to outline contingency plans for unexpected events and consult with legal and financial experts to ensure smooth implementation.
What happens to a commercial property if the owner passes away and has not willed it to anyone?
If the owner of a commercial property passes away without a will, the property enters probate, where a court determines its distribution. Typically, the property will be inherited by the owner’s legal heirs, as per the state’s intestate succession laws.
If no heirs are found, the property may become state-owned. The state further gets to decide if it wants to give away the property to the deceased’s closest relatives.
Remember: choosing a successor isn’t just about picking your favorite relative or the employee with the best numbers. It’s about selecting someone with the right leadership skills to carry your vision forward.
Estate planning for your commercial properties isn’t the most glamorous task, but it’s a crucial one, so why not get started now? Your future self and your business will thank you for it. When the time comes, your successors will know exactly what to do without the added stress of figuring out what you would have wanted.
Article and permission to publish here provided by Danielle Ferguson. Originally written for Supply Chain Game Changer and published on October 16, 2024.
Cover image provided by pexels.com.