In general I am not a fan of “listicles”. They feel like a cheap, click-baity, headline grabbing way to produce content and drive traffic to your website. Reading them can feel…yucky. So I typically try to avoid publishing them. I care greatly about the integrity of this site, and avoid content that I don’t think is genuinely valuable.
Recently I’ve run across a number business owners who’ve done ZERO estate planning. No idea who steps in to run their business if they’re not around. No will. No trust. Nothing.
This is pretty common, unfortunately. Hundreds of thousands of small businesses out there have done no estate or succession planning. A study of 200 by Wilmington Trust found that 58% had no plan in place whatsoever. I’ve written on this subject recently. Because this is such an important topic, I’m going to break my rule about listicles today to drive the point home. (Hey, in moderation they can be an effective way to communicate. Who doesn’t like digestible, bite sized snippets?).
Here are my top six reasons estate planning is so important for business owners.
#1: You & Your Family Probably Depend On It
For most business owners I speak with about financial matters, a substantial portion of their net worth consists the equity in their business. And when I say substantial, I mean up to 75-80%. Without any type of plan in place, there’s a very high likelihood that the value of this equity dissolves entirely if you become incapacitated or die unexpectedly.
Even if you have a long term disability insurance policy in place, losing the equity in your business would probably have a significant financial impact on your family. Having a succession plan in place in just in case something does happen is the only way to preserve your equity. And therefore your family’s balance sheet.