Estate Planning Tips for Michigan Small Business Owners
The past year has brought an extraordinary amount of change to small businesses in Michigan, in both good ways and bad ways. Which has led to a lot of small business owners realizing that the unexpected really can happen in the blink of an eye. Here are 3 simple estate planning tips for small business owners to make life so much simpler for your loved ones if something were to happen to you.
1. Have a written beneficiary designation
What if I told you that in less than 30 seconds you can save your loved ones months of paperwork and thousands of dollars in expenses? Most people are familiar with beneficiary designations for financial products like retirement plan accounts and life insurance policies – which can be an incredibly efficient way to keep those assets out of probate court.
But did you know that in one simple paragraph you can also designate who you would want to receive the ownership interest of your Michigan small business? Without such a beneficiary designation in place, your loved ones would have to unnecessarily do things like figure out exactly how much your business is worth for probate court inventory purposes.
A beneficiary designation often gets overlooked when first setting up a business, but it is so important and simple that I am happy to provide it for free to any small business owner that contacts my firm.
2. Appoint a financial power of attorney
Signing the front of checks is a necessary task for solo business owners – but how will your bills get paid if there is an accident and you are incapacitated? A foundational part of any personal estate plan is a financial power of attorney, and it is even more important for small business owners because of unique estate planning laws in Michigan.
By officially appointing someone in advance who can legally do things for you like talk to your bank, open your mail, or file tax returns, you ensure that the basic operations of your business will continue if you are unable to take care of things for an extended period. And it is very common to appoint one person to handle your personal finances and a different person to handle your business finances.
3. Purchase appropriate levels of life and disability insurance
There are so many great things about being an entrepreneur, but one of the drawbacks is often giving up traditional employee benefits like retirement plan contributions and insurance coverages. If something were to happen to you tomorrow, how would your family replace the income from your business?
Knowing that your family will be financially stable in the event you are no longer able to run your company is one of the greatest gifts you can provide, and I highly recommended contacting a life and disability insurance agents for more information.
Our tagline at West Michigan Law is “Bringing You Peace of Mind” because it is both professionally and personally satisfying to see the look of relief in our client’s eyes after signing planning documents. With knowing that these simple documents for small business owners are in place and sitting in a desk drawer at your home or office, you too can have one less nagging feeling in the back of your head.