Estate planning and estate litigation for business owners

Many business owners avoid estate planning due to the many complexities and legalities involved. It is common for British Columbia business owners to invest time in creating a lengthy business plan when they begin, but less common for them to have robust planning in place to make an exit. However, not having solid plans in place can lead to family disputes and even estate litigation down the road.

For a family business, failing to properly execute estate planning and administration can have serious consequences. Close to three-quarters of such businesses do not succeed through the second generation, and only 10 percent are able to make it to a third. While some people may not want to keep a business open after they pass away, those who do may find that failure to plan can lead to estate litigation, which may ultimately end the business altogether.

The focus for business owners should be to find a person, either inside or outside of the family, to inherit the business. Funding the business' future as well as retirement should also be considered. An Individual Pension Plan, or IPP, can help a British Columbia business owner prepare for retirement in a flexible, business-focused way.

The best advice for British Columbia business owners looking to plan their futures is to surround themselves with knowledgeable experts. Families undergoing estate litigation can also benefit from having experienced professionals weigh in on the legalities and financial realities of disputes and questions around a business and other inheritance. A lawyer with estate litigation experience is one expert that can be very useful in these cases.

Source: The Globe and Mail, "Well-to-do business owners face estate-planning hurdles", Paul Brent, Oct. 31, 2017

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