Photo by Flickr (David Morris)
Previously, we’ve discussed a number of mistakes that you should avoid in your business. This month, we’ll turn to a mistake that can trickle into your personal life. A lot of business owners are so busy running their businesses and making sure they have all the appropriate planning and controls in place that they miss a very important aspect of personal planning: estate planning!
As a reminder, while these are general tips, it is important to consult with an attorney individually if you have specific questions or concerns. The following is not intended to be legal advice.
Mistake # 8 – Not Planning for the Future!
A majority of people neglect their estate planning, and it can have a big impact not only on their personal lives, but on their business as well.
Without proper estate planning and asset protection, you could put your hard earned money at risk because you have little to no estate tax protection.
This could potentially limit the inheritance available to your family that you intended to pass on as your legacy. Further, neglecting your estate planning could mean your business has to be sold, even if that was not your plan; and your business, or worse yet, your loved ones, would be stuck with the tax bill for the sale of the business or assets.
Basic estate planning includes a will or trust, a power of attorney, and an advanced directive for medical decisions.
- A will controls what happens to your assets upon your death and can provide some asset and tax protection planning.
- A power of attorney is a document effective during your lifetime that allows someone to step in as your “agent” and make financial decisions on your behalf if you are unable to make those decisions on your own.
- An advanced directive for medical decisions allows someone to make medical decisions on your behalf if you are unable to.
Without these documents in place, there are likely a number of default rules that apply in your state that you may not agree with. You may want to take the opportunity to look into what kinds of laws apply in your state if you do not have a will or what happens you are incapacitated and someone needs to act on your behalf. Typically, understanding and following these default rules leads to greater expense and greater headaches for your loved ones.
In addition to basic estate planning, there may be some special considerations for your business.
For example, sometimes in a partnership, it is prudent to have life insurance policies in place for each of the partners with the business named as the beneficiary. This way, in the event that one of the partners passes away, the business has the ability to “buy out” the interest of that partner and continue on with the business. Decisions like this can be part of your overall estate planning, since you want to make sure to protect all the hard work, time, and resources you put into growing your business.
Take the time today to protect and plan for your own future, in addition to the future of your business!
Next Month: “Mistake #9 – Not Pursuing Certifications”
About Leah Barteld Clague, Esq.
Leah Barteld Clague is an attorney with McLaughlin Law Group, a boutique law firm focused on corporate (small business), estate planning, and estate and trust administration, and tax law. McLaughlin Law Group, started by L. Content McLaughlin, serves clients throughout Maryland. Leah started with the firm in August 2012 after graduating from the University of Maryland, School of Law. Prior to law school, Leah completed her MBA and worked as a financial analyst in both the private and public sector.
In addition to estate planning, Leah has a passion for working with small businesses. As a student, she helped grow a program called “The York (PA) Business Academy” that provided brief classes on marketing, management, financing, and legal issues for small businesses and aspiring entrepreneurs. More recently, she consulted for a number of for-profit and non-profit clients and developed business plans, financial models, and marketing strategies that were presented to venture capitalists.
Feel free to contact Leah at firstname.lastname@example.org or 410-660-2095.