A recent blog post of mine spoke about charitable trusts and the various ways to incorporate charitable giving into your estate plan as an individual. While the overall process is similar for someone who owns a business, there are a few notable differences to bear in mind. For businesses that are big enough or in certain industries where the hard assets are highly valued, you might have a liquidation event where there is a good deal of money freed up the form of cash or stock. I know of a number of instances in which respected entities like the New Hampshire Charitable Foundation have worked with people to set up charitable funds at the time of that liquidity event, so that’s something to think about if you’re fortunate enough to be thinking about retiring and you’ve got someone interested in your business.
Another way that you can make charitable donations through your estate plan is by establishing a fund. If a charitably motivated owner did very well in a particular year and wanted to leverage that surplus, they could establish a donor advised fund and encourage employees to contribute. This is a great way to establish a lasting legacy by utilizing the fund to grant scholarships or support people entering the field in the future. This isn’t so much a corporate donation as it is individuals banding together for a common cause but, doing so under the banner of your organization is a great way to affect positive change for years to come.
Whether we’re talking about a small landscaping service, a couple running a restaurant, or a midsized engineering firm, the best piece of advice I can give to business owners is to not put off thinking about your estate plan, because developing one takes a lot of thought and time. Once you have a basic estate model and plan in place, that becomes the scaffolding on which you can continue to build. If you haven’t given much thought to your business transition, we start with talking about that and it just becomes another element that we build into our periodic reviews as you approach retirement. It is never too soon to begin thinking about when and how to transition your business, partly because these things can take a long time to fall into place, but also because it may affect your hiring.
Planning your estate establishes a supportive foundation for not only your own future, but also that of the business you’ve worked so hard to build. Working with an estate planning attorney who knows the right questions to ask is an easy way to start moving in the right direction. By putting a sound plan in place early, you can ensure not only your own peace of mind, but that of your heirs and employees as well.