If you are a longtime Kentucky business owner, you may have already given some thought to whom you want to run your business after you pass away; in fact, you may have even discussed this with your intended successor. However, when it comes to businesses and other property, a handshake agreement will not suffice. The best way to help ensure your intended beneficiaries inherit your business or assets is to include them in an estate plan.
Components of an estate plan
An estate plan can include a will or a trust. One benefit of a trust is that it can allow for more complex business inheritance plans, such as by including directions for a trustee whom your designate to manage your business assets. Other documents in an estate plan can include a succession plan, power of attorney, and insurance policies.
Creating a succession plan
A succession plan is something business owners can create that spells out what will happen to your business after you die or if you become incapacitated. When creating a succession plan, you should consider whether you want to pass the business on to a family member, give your ownership interest to your co-owner or have someone sell or close the business.
Power of attorney
Other documents to consider adding in your estate plan are a financial power of attorney and medical power of attorney, which you would use to designate someone to make financial and medical decisions on your behalf if you become incapacitated. Similarly, an advance healthcare directive explains what you want medical providers to do if you are in an end-of-life situation.
Two policies to consider, if you have dependents, are life insurance and disability insurance. These policies are meant to cover your dependents if you unexpectedly die or become disabled and are unable to work. A good policy for business owners is key person insurance, which covers business expenses for whomever has to take over your business. An estate planning attorney may be of assistance as you consider insurance policies and create your estate plan.