There are many different types of businesses in the United States, and small businesses — the most common type — tend to fall into one of three broad categories. These are owner-dependent, multigenerational or marketable. Let’s take a moment to consider the first two.
An owner-dependent business is one that was founded by one person and that is generally run by that person. When that individual passes away or retires, the business generally closes.
This may mean that you have specific skills, allowing you to run the company. Maybe you’re a mechanic, and your company is a repair shop. If your children do not have those same skills, you’re probably not going to pass the business on to them. That likely means that your estate plan needs to center on selling the company or closing it down and then distributing the financial assets.
A multigenerational business, on the other hand, may still be one that you started, but you are not the only person who can do it. Your plan, then, maybe be to train your heirs in how to run the company. You can then leave them ownership in the company when you pass away, rather than financial assets. The business itself is a valuable asset that can keep earning money for your heirs for years to come. This may be a bit more of a complex estate planning issue, though, as you pass the company down.
No matter what type of business you have or what you decide to do with it, you must know what legal steps to take.