Estate planning is an important process not only for individuals but also for small business owners. You might have invested significant time, energy, and money into building your business as a small business owner. Therefore, you might want to ensure that your hard work is protected and that your assets are distributed according to your wishes after you pass away.
An estate planning process involves a variety of legal documents, including wills and powers of attorney. These documents provide instructions for how your assets should be distributed and managed after your death or while you are mentally incapacitated.
If you are a small business owner, estate planning allows you to communicate your wishes on how you want your business affairs to be handled after your death. If you want your business to be sold after you pass away or wish your children to take over and carry on the business, you can indicate these wishes in your will. You can also provide details and directions on how you wish your business to be dealt with upon your death.
You might also want to consult with your loved ones in advance to confirm your wishes. This way, you would be able to see if your beneficiaries are willing to operate your business upon your death.
In addition, there are certain other considerations to keep in mind while planning for the succession of your business such as partnerships and shareholder agreements. A partnership or shareholder agreement can provide your child with ownership or interest in the business under strategic circumstances. It’s important to seek legal advice from a lawyer to create a comprehensive plan that aligns with your financial and personal goals.
As a small business owner, you might also have various assets associated with your business, which go beyond just your inventory, such as furniture in your commercial space or digital assets. Estate planning for small businesses can help you ensure that these assets are handled properly, regardless of your desires for the future of your business. Digital assets such as social media accounts, online banking and investment accounts, digital photos, email accounts, and cloud storage are an important part of your business. They hold valuable information and memories. As we increasingly store our important information and memories online, it has become essential to include them in our estate planning.
Another key consideration to keep in mind is the tax obligations for small business owners while planning. For instance, the HST account of the business owner (if applicable) might have to be canceled and a final tax return might have to be submitted. Following the final tax return, the business number and CRA accounts of the business owner will need to be addressed.
If you need assistance in creating your estate plan as a small business owner, contact us today and see how we can help you create a comprehensive plan for your future wishes and personal goals.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.