1. Making a Will
The first call to action in setting up your financials for the future is having a will. A will plots out the distribution of assets and to whom they will be transferred to after someone’s death. If the company is a sole proprietorship then it is important to give digital access such as the email accounts and social media sites to the same person.
A trust is a must for a company because it allows for transferring of assets more privately and helps the business run more smoothly. The problem with a will is that it’s a public document and it needs to be probated in court without a trust fund. So the company handlers have to manage a lot of delay costs. That is why it is important to have a revocable living trust in place so that the creator of the trust can continue to manage his/her assets during their lifetime.
Most startups in today’s world have more than one owner and it is important to set up a Buy-Sell Agreement for good faith. In the events of death of one of the owners, it would entail the redistribution of his/her interests within the company. The Buy-Sell Agreement also helps in dictating the cross-purchase and stock-redemption agreements which would allow the remaining owners to partake in the shares of the departing owner.
The most important protection of them all is obtained via forming an offshore asset protection trust with a trusted retirement planning attorney. These are meant to protect assets from any unlawful creditors. This trust usually has a term of years’ irrevocable clause attached to them so the trust maker is at no immediate risk and can regain control over all of his assets given negation of risks. It is meant to protect assets during hardships such as divorces and deaths of beneficiaries linked to the company so having one set up benefits the company and the owners a great deal.
A well detailed and thorough estate plan calls for a formal and well implemented succession plan which would allow for smooth transition for the business. This will help in identifying executive roles and management duties amongst key figures and family members. The main goal would be, to choose the most capable individuals to take over the business once the time comes. It’s a great way to resolve any disputes and for compensating and promoting people involved with the company.
It’s of utmost importance to have a general power of attorney in case of the owner’s inability to run the company. While other owners and beneficiaries can manage assets and other facets of the financials of the company, the individual vested with the power of attorney would handle the business affairs. It is wise to have documentation of this because without it, the court would just appoint a guardian themselves which might not be favorable to the company.
While it is important for every individual to have an estate plan and to protect their financials for the future, it is especially important for an entrepreneur. That is why, following the tips mentioned would leave no room for unwarranted troubles during complicated times for the business and personnel.