Cornwall Wills and Estates Lawyer Asks, “Will Your Small Business Survive after Your Death?”
You’ve worked so hard for the success of your small business, but have you thought about what will happen to it after you’re gone? By planning in advance, the small business owner can ensure that his or her wishes are followed should the unthinkable occur. Not only does this kind of planning make for an easier transition on those left behind, but it also saves money and can literally keep the business from failing altogether.
Your small business is a part of your estate, and just like your home and other assets, planning needs to be done for how it should be handled upon your death. You’ll want to go over your options with a qualified Cornwall and area wills and estates lawyer (as well as your accountant!) and make your decisions legal and binding with proper documentation. Of course, you’ll also want to communicate with those individuals who will be charged with following your wishes and keeping the small business running smoothly.
Unfortunately, the death of a small business owner can also spell the death of the business. Estate administration (also known as probate) taxes and income taxes can be so expensive that the business just can’t survive paying them. Or, the other partners in the business cannot afford to buy the decease’s share in the business, so the business gets sold to a third party and the profits divided.
Laws like this play a role in the fact that small businesses do not typically survive through the generations. According to The Small Business Review, only about 30% of family businesses make it to the second generation, 12% to the third generation, and 3% to the fourth generation. Obviously, there are a number of factors involved, but the need to pay taxes and take care of other transitional costs creates a significant burden in passing a business on to heirs.
By planning in advance, you can take advantage of tax reduction planning and limiting (or avoiding) probate taxes. Many of the options available to small business owners can only be utilized before death, not after, so it is important to make plans for your business succession now.
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Michele R.J. Allinotte is the owner of Allinotte Law Office in Cornwall, Ontario and she helps her clients make the best decisions for themselves, their families and their businesses. Her practice focuses on the areas of business law, estate planning and real estate. Visit www.YourCornwallLawyer.com to get her FREE Peace of Mind Personal Inventory to make sure that your family has all the information they need.
Let’s pretend that April 30th doesn’t exist!
Just as you begin to enjoy the warmer weather that spring brings, it hits you. It’s tax time!
For most people tax time brings up images of boxes of random receipts and hours of searching for documents. Trying to get ready to do your tax return or organize for that yearly meeting with your tax preparer is a necessary evil.
What if you could avoid April 30th?
Imagine this, what if we could use the excuse that we are “too busy” or we were just not organized enough to do taxes? How many of us would actually get around to doing them? Not many, I’m guessing!
I know this is true because I hear it all of the time when people put off doing their estate plan!
But here’s the thing…just as Benjamin Franklin said over 100 years go…
“Nothing is certain but death and taxes.”
The thing is, people do plan for taxes each year. Whether it is because you are expecting to get a tax refund or out of a sense of obligation, you faithfully file your taxes. But what if I told you that those two critical reasons for doing your taxes are the exact same reasons you should do your estate plan? Let’s explore further…
“I’m too busy to do my estate plan. I’ll do it later.” Unlike tax season we do not know the exact date that we will die. But that date will come. It’s no fun to think about this, but there will be a date where we will die. If you pass away without an estate plan you will leave a mess for your family to deal with. Do you really want your loved ones dealing with a financial nightmare or would you prefer to take a deep breath, face your fears, and make things as easy as possible for them?
“I have better ways to spend my money.” Yes, doing your estate plan will cost you money, but here’s the thing. It could cost your family a LOT more in taxes if you choose not to put an estate plan in place. Do you really want the money you’ve worked for all of your life going to your tax bill instead of your family? The bottom line is that you can pay a little now or your family will pay a lot later!
Truth is, we don’t know our life’s “deadline.” We don’t have a government body like the Canada Revenue Agency looming over us threatening us if we fail to do our estate plan. But, the consequences that your loved ones will face if you fail to take care of this can be just as bad.
So, once you’ve gotten your documents organized for your tax preparation, why not go ahead and schedule an appointment to discuss estate planning for your family? Then you’ll have the peace-of-mind of knowing that your family will be taken care of no matter what.
