Ensuring that your estate plan covers every aspect of your life is essential to prevent issues after your death. While you may find it easy to assign assets to heirs, there is one asset that often creates the most complicated situation.
Deciding what to do with your business after your death can be very hard because you may not know what options you have. Forbes explains that there are three general choices you can make in regard to what happens with your business upon your death: transition, split or sell.
If you have heirs who want to take over the business, then this presents you with the opportunity to pass it on and ensure it stays around after your death. You can begin the transition as soon as you want, which also allows you to enter retirement before your death.
You will need to formalize this by stating the ownership transfer in your estate plan. You could also transfer ownership prior to your death if you want to do that.
If you think that your family may want to take over the business or you do not care if they take it over or sell it, then you can leave equal ownership rights to your heirs. For example, if you have two daughters and a son, you would split ownership rights into thirds.
This would require they all agree on details about what to do with the business after your death, which can create a sticky situation if they do not see eye to eye. Make sure that this arrangement works for your family to avoid conflict in the future.
You also can sell your business to someone outside the family and then divide the profits among your heirs. This is a good idea if you want to keep the business running but your heirs have no interest in running it.