For many successful business owners, the company they’ve built may be a major part of the estate they leave behind for family and others, and the legacy by which they’ll be remembered. A clear, detailed estate plan can help ensure that the business and its assets (along with personal property) go to the people and institutions the owner intends, in the most direct and tax-efficient way possible.
Ideally, though, the planning starts with the owner’s deepest personal values and goals. Before discussing specific strategies, think about what matters most to you. When it comes to your business, a clear understanding of the legacy you envision can help lay the path toward the best approaches.
Questions to Consider for Business Owners
To get things started, I suggest a conversation with your Huntington Private Bank advisor, based on these questions.
1. If I had to leave my business today, without warning, what would happen to it?
Many business owners believe that when they leave their business it will be by choice, when they’re ready. But life can be unpredictable, and when and how you leave your business isn’t always under your control. Even good intentions—like wanting to have your children run the business together—can become more complex than you anticipated.
Think about where your business is right now, and what would happen to it if you suddenly became disabled and had to stop working. These considerations can help you identify and focus on long-term priorities.
2. What could disrupt my plans? Is my business and the next generation ready for what might happen?
Even if you have a good idea of what you want to happen to your business, think about the potential complications. Is the next generation prepared for leadership? Are your children or other heirs prepared to inherit your wealth? If something happened to you, would they have to sell your business at a discount?
Actions you take now could make it more likely that your family or other heirs can run, or sell, the business as you want them to, but it will take advanced planning. You’ll want to take practical matters into consideration: Will extracting the money you need for life’s next adventure leave the company strapped for cash? Do you have a successor in mind? Questions like these can point you toward necessary concerns to take into account.
3. How can I protect my assets?
Sometimes it feels like everyone out there wants a piece of the business you’ve built. You’ll want to protect your assets against competing interests, such as a son-in-law who you may not want controlling the business, or against the threat of litigation. How can you ensure your business is preserved for the people and goals you care about?
This question can facilitate discussion with legal counsel about potential strategies for protecting the company from creditors, remaining tax efficient, ensuring that family members will handle wealth responsibly, and more.
4. How can I be sure all of my family members are treated fairly?
This may reveal a lot about your family dynamics. How would you like to compensate children who participate in the business, those who choose other careers, or those who are from a previous marriage? If some in your family prove more responsible than others, does “fair” always mean “equal?”
This will be a decision that research and data can’t help with, but deep thought might. The goal is to arrive at a personal definition of fairness that your estate plan can reflect. Remember that those who carry on your business may have to face the fallout of your decisions.
5. Who should I tell about my estate plan, and when?
One of the most challenging aspects of estate planning is recognizing that you won’t be there to help your family after you’re gone. Knowing you have trusted legal, tax, and financial advisors can alleviate some concerns. They can help you make a good plan and assist your family after you’re gone by facilitating the sale of your business or working to realize a succession plan.
Most people are reluctant to talk about their finances or estate plan. Bringing in objective outsiders can help you create a workable plan and take the weight of implementation off your loved ones.
6. What will my legacy be?
The wealth you’ve achieved may be an important part of your desire to make a difference in the world, and to be remembered for the values that matter most to you. Your estate plan is key to ensuring the legacy you envision is realized. There are many strategies, like charitable gifts, that can be part of your planned approach. By understanding your vision and objectives, your advisor can help you reach your goals—and shape your legacy.
7. When I’m gone, who’ll safeguard everything I’ve built?
With a well-crafted estate plan, a professional fiduciary will honor your wishes. Asking a loved one to act as your administrator may seem like a good idea, but it may turn out to be a burden or simply a role that person is not qualified to fulfill.
Including a professional fiduciary can alleviate the pressure and see to it that your wishes—for your business, your estate, and those you love—are honored. In conjunction with your legal counsel, your advisor can help you determine a good fiduciary for your estate and, if you wish, Huntington Private Bank can provide trustee services. It can help to know that you have a good plan, and that it’s also going to be executed as you intended.
Building and running a successful business requires focus and planning, just as the preparation of passing it down does. To learn more, please contact your Huntington Private Bank team to see how we can help or find a Huntington Private Bank office near you.