The vast majority of American family-owned businesses are proudly passed from one generation to the next. However, passing on the business you’ve worked so hard to build can come with some significant challenges that require careful planning to ensure a smooth and sustainable transition.
We’ve all heard from lawyers like me (perhaps, ad nauseam) how important estate planning is, but we keep harping on precisely because we’ve witnessed the havoc that occurs when families fail to plan for the future. Because so many modern businesses have become more sophisticated and more valuable than in previous generations, succession planning has become more complex, making estate planning is more critical than it has ever been.
Naturally, all of this complexity can lead most people to procrastinate when it comes to estate planning. At Davidson Law Firm we’ve heard the same excuses for delaying this inevitable task over and over, but for every excuse, there are a handful of reasons to get motivated and take action.
1. Estate planning is expensive.
Well, that might be true. The cost of estate planning, like so many other responsibilities we have to our future and our families, is high precisely because it is so vital. However, it is important to remember that the eventual cost to your loved ones will often far outweigh the price of putting a solid plan in place today.
2. Estate planning is time-consuming.
Yep. Setting up an estate plan does take time and we understand that your time is valuable, but paying careful attention to these details now, will ensure your family will come out ahead in the future. Further, good estate planning can often provide you with a better perspective on your finances and operations, leading you to make better business decisions that can improve your bottom line.
3. Creating an estate plan will just lead to family fights.
Discussing inheritance, money, and asset issues can be uncomfortable for everyone involved. However, dying without an estate plan in place can cause family feuds that are far more than just uncomfortable. It often results in prolonged litigation, a process that can be very expensive and painful for those you leave behind.
4. I already have a will.
Good! But remember, in most states, a simple will not protect your family from the often expensive and time-consuming probate process. Further, your operations and assets will most likely change over time so you need to have an estate plan that is reviewed and updated periodically to ensure it still reflects the needs of your current financial situation. For example, assets like real estate can appreciate quickly and significantly, meaning your net worth is much different than it was 10 years ago.
5. I don’t want to talk about dying.
No one does, but death is inevitable. It is the one and only certainty life gives us. It might be in our nature to ignore or avoid that reality, but as any businessperson will tell you, unpleasant tasks are often critical for success. You and your family deserve the peace of mind that comes with having a solid estate plan in place.
The estate planning process can seem like a chore that no one wants to go through, but that doesn’t change how important it can be to your family’s future. So, forget about those excuses and contact an attorney you trust to get an estate plan in place. Your family will thank you.