Ohio business owners may already have a will or be in the process of creating one, but how many of them have a succession plan? This is just one of many documents that comprise an estate plan, all of which merit consideration. Other documents in an estate plan, such as power of attorney, can be beneficial for business owners and non-business owners alike.
Business owners can use a succession plan to name a person to take over their organizations if they become incapacitated or pass away. An individual can also use these plans to provide directions on how he or she wants someone to get rid of the business after his or her death, such as by selling ownership shares to a co-owner or selling the company altogether.
Estate planning also allows individuals to name a trustee to manage business assets on behalf of their beneficiaries via a living revocable trust. If someone becomes mentally incapacitated, another person can take over making decisions relating to that person’s financial and medical matters if he or she prepared a financial and/or medical power of attorney before becoming incapacitated.
Many people are familiar with disability and life insurance, which provide coverage to individuals who become disabled and unable to work or who pass away. Key person insurance is another form of coverage that can offer coverage to a specific business. Key person insurance and key person disability insurance that name a business as a beneficiary can pay benefits to a person who takes over a business when the business owner passes away or becomes incapacitated.
If a business owner’s succession plan includes a buy-sell agreement, key person insurance becomes necessary. Business owners and other Ohio residents who need assistance with creating an estate plan may want to consult with a local estate planning attorney.