National "Make a Will" Month: Why Business Owners Need One and How to Get Started

For business owners, plans are essential because personal and professional assets can be so deeply intertwined — a solid succession plan is the best way to safeguard both.

Plan for the Unexpected, Protect Your Future

A clear estate plan ensures that state laws or outdated documents don't dictate what happens to your hard-earned business. Without up-to-date, legally binding documents in place, your business could end up in the hands of unprepared, inactive partners or outside parties. 

• What would happen to your business if you were suddenly incapacitated by a health issue? Without a Power of Attorney, your business could stall, and payroll could go unpaid. Having someone you trust ready to step in can help to ensure your business keeps running smoothly.
• What if you or a business partner decides to retire? Without a Buy-Sell Agreement, you could suddenly find yourself in business with your partner’s heirs or someone you never intended to work with. This agreement sets the rules upfront and ensures you have a safety net.
• What about the future of your legacy? Without a Will or Living Trust, the ownership of your business could be tied up in court, creating unnecessary stress for your family. A clear plan ensures your business goes to who you choose, helping to protect your loved ones' future. 

For business owners, having the right legal documents can be a lifesaver when the unexpected happens. Although succession planning can sound like a tedious process, taking preliminary steps will relieve difficult transitions and keep your partners and employees on the same page.

Secure Your Legacy for Peace of Mind

Starting your plan today gives you a strong foundation that you can easily update as your business grows or as your family’s needs change. 

To get started, consider taking these essential steps:

Step 1. Take a fresh look at your company's value. Conducting a thorough financial assessment of debts, assets, equipment, real property, and profitability gives you a clear baseline for valuation.

Step 2. Next, consider your personal goals alongside your business goals. Deciding who you trust to step into key leadership positions and training them early can help to ensure a smooth transition. 

Step 3. Pairing these steps with legally binding contracts like Buy-Sell Agreements can also protect your existing team and reassure investors and customers that the business will continue to thrive.

At the end of the day, proactive estate and succession planning is about peace of mind. For business owners, ensuring your company remains a reliable asset for your family and partners can be the ultimate reassurance.

Questions to Ask Yourself About Your Estate and Succession Plan

National "Make a Will" Month is a great opportunity to review whether your current legal documents reflect how your business operates today, and how you’d like it to continue in the future.

• Do you have a Buy-Sell Agreement in place? Does it clearly spell out valuation methods, transfer terms, and funding mechanisms like life insurance?
• Who has the authority to make decisions if you are incapacitated? Have you appointed a Power of Attorney to prevent a court from needing to step in to manage your business affairs?
• Does your plan reflect your current operations? Have recent business growth or debt shifts created gaps in your original agreements?
• Should you review your policies with professional advisors? Have you consulted an attorney or financial advisor to confirm your documents align with current legal and tax requirements?

What to Do Next

You don’t need to wait for an unexpected emergency or medical determination to secure your business and family. Consider taking these next steps:

1. Conduct a financial assessment and business valuation to establish a fair picture of your company's assets and debts.
2. Draft or update essential legal documents, including your Power of Attorney, Buy-Sell Agreements, and Will or Living Trusts. Rocket Lawyer's AI legal assistant can help you generate drafts and navigate your documents.
3. Evaluate key person life insurance options to ensure surviving partners or family members have immediate liquidity if leadership changes hands.
4. Identify and train future leaders to ensure a smooth transition of executive responsibilities.
5. Consult with trusted advisors. Rocket Lawyer can easily connect you with an attorney to ensure your succession and estate plans are legally sound and protect your company’s future.