Tuesday, December 7, 2021

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    Estate planning basics for founders and entrepreneurs – TechCrunch

    When you’re wearing multiple hats while managing a startup’s operations, you have little time to stop and think about what happens if things go catastrophically. If you die suddenly and leave a venture that sheds a lot of blood, sweat, and tears without a leader, you probably don’t consider the consequences.

    It’s even less to think about what will happen rear We die — when a state court hands over a business to an unprepared family member or detains a business property for months or years until your property is settled.

    Unfortunately, if no real estate planning is in place, these scenarios are quite possible. It is not possible to emphasize how important it is for startup founders and business owners to plan. It not only protects your assets, but also keeps your legacy intact.

    This may seem a bit dark, but making a real estate plan will reassure you.

    We repeatedly hear about the very realistic consequences of business owners dying without a real estate plan that legally directs their wishes. Just a year ago, former Zappos CEO Tony Hsieh said: Died in a fire at 46. Prior to this, he had retired with an estimated net worth of $ 840 million, but then his family had him Will died..

    Currently, they are desperately trying to apply for access to the former CEO’s account and assets, but it doesn’t help. And what makes the case even more tragic is that She had a lot of charitable interests and definitely wanted to donate some of his wealth after his death.

    A recent survey from LegalZoom.com found that 62% Many Americans do not have a proper real estate plan. However, 32% of young people between the ages of 18 and 34 say they have organized their real estate plans for a pandemic. In addition, 21% of the group said they created the plan simply because they or someone they knew had COVID-19.

    We all want to build a business that is timeless and lasts for decades. So you need to make sure your business is in good shape no matter what happens. Now that COVID-19 focuses on real estate planning, let’s see what we can do to ensure a stress-free plan.

    Organize your documents

    To get started, startup owners need to look up the documents needed to implement a real estate plan.

    Every adult in the United States must have the power and will of a medical and financial lawyer. The medical and financial strength of a lawyer empowers someone you trust to make a decision for you during your lifetime if you are unable to lead your business. It is a document to give. None of them are organized, and if you become incapacitated or die, the state will come and make a decision for you, no matter what you choose.

    In addition to the documents you need to prepare for your real estate plan (lawyer authority, health agent, will), it is also worth considering creating a living trust with the “injection will” associated with all assets. .. that. This means that in the case of premature death, the distribution of assets to beneficiaries is a much smoother process, as the court does not have to intervene to empower the executor.

    If you are a sole proprietor, your business may simply dissolve if you die, depending on the state’s intestacy law. Alternatively, the court may give your spouse or other surviving family a sole proprietorship, which presents additional issues.

    For example, suppose a party applies for a divorce, but owns a very successful business and has been married to the point of sudden death. In that case, the spouse may inherit the company, but it certainly does not benefit the deceased.

    The real estate planning service describes the various elements required for each document. For example, this may refer to distributing assets to beneficiaries or assigning parents to children.

    Once that is done, the document must be notarized and, in the case of a will or power of attorney, a witness must be present. The final step is to upload them to your digital portal. Some companies can also provide 24/7 access.

    A constantly evolving situation

    Real estate plans need to be adjusted throughout your life, especially if you own a fast-growing startup that may become a major player in your sector in the future. Ideally, we update our real estate plans every year around the tax return deadline, but the situation can be much more fluid depending on the state of the business.

    Your business assets may quickly gain value or you may decide to take a different approach to your successor development plan (how complex this is for anyone who has watched the TV drama “Successor”. I know if it will be).

    You have to decide who you trust to take over your company if something happens to you. It’s not just about having a real estate plan that expresses your wishes — it’s almost just as important to convey it as a written successor plan.

    HBR estimates it Company valuations and investor returns are 20% to 25% higher with better successor development plans. This needs to be coordinated with your will to avoid the possibility of conflicting rights to the asset. Ideally, you want to give this person as much notification as possible, so they are prepared for your death and you don’t have to spend unnecessary time and money hiring a lawyer or filling out paperwork.

    It is also worth noting that the valuation can change when it comes to splitting the value of an asset. Therefore, it is important to update your real estate plan.

    For example, you might decide to donate a portion of your total property to the church, but if the value of your property increases over the years, this total is much more than you initially thought. It may grow. Similarly, if you allocate a large amount of cash value to a particular party and your property loses value, they may receive much more than you comfortably give.

    We have been discussing real estate planning from the standpoint of the wealthy, but some startups may not be thinking about it at this stage, but we need to consider the future. As of January 2022 Up to $ 3.5 million Your net worth will not be taxed by the federal government after you die.

    However, any excess will be taxed at a federal heritage tax rate of up to 40%. Therefore, if a successful founder dies without a real estate plan, they can leave legal difficulties for the family and their real estate can lose a significant amount of federal taxes.

    This may seem a bit dark, but making a real estate plan will reassure you.

    I don’t want to be afraid. Instead, I would like to emphasize the costly and damaging consequences of something happening and you don’t have a proper real estate plan. Startup owners can forgive that they haven’t previously considered a real estate plan. Leaders often work non-stop to get their business on track, but if you don’t take the time to get on top of it, you can run into even more problems.

    By performing these steps and paying attention to the above precautions, you can reduce the excessive stress on you and your family in the event of the worst.

    Estate planning basics for founders and entrepreneurs – TechCrunch Source link Estate planning basics for founders and entrepreneurs – TechCrunch

    The post Estate planning basics for founders and entrepreneurs – TechCrunch appeared first on California News Times.

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