Businesswomen Without Estate Plans: Planning to Fail
Surprisingly, many female business owners do not have personal estate plans or business succession plans to protect their finances, families, and legacies. Without a business succession plan to determine whether and how the company will continue to operate, there is no guarantee that the company will be handled according to the owner’s wishes.
So, why don’t female business owners have estate plans?
Many businesswomen are so busy running their companies, caring for their families, and making time for themselves that they neglect to formalize a plan. Others may not want to think about giving up their businesses. Other reasons include a lack of awareness of their company’s value or the impact that owning a business may have on their family. Some female entrepreneurs plan to work well into retirement and have given little thought to the future of their companies when they are no longer at the helm.
These often-heard justifications put businesswomen in jeopardy of losing everything for which they have worked. If the business is the main source of income, not having a business succession plan or personal estate plan is planning to fail.
Life Expectancy Facts
According to Social Security Administration statistics, the average woman is expected to live until age 86.5, whereas a man can expect to live to age 84. This means that women are expected to outlive their husbands, which is bad news for those women whose informal plans are to pass on their businesses to their spouses. Moreover, given that women are forecasted to outlive their male counterparts, they are also expected to have longer retirement periods. Therefore, women need a formal plan to ensure that they have income and investments in place to sustain them through retirement.
Business Succession Plan
A business succession plan includes identifying a new leader for the company and allows time for them to develop the skills needed to run the business. It also determines whether the business is to be sold, liquidated, or kept in the family. Working without a succession plan leaves the business, partners, employees, customers, and family members without direction, and invites chaos. For example, not having a succession plan can result in relatives of the deceased owner running the business without having the requisite skills to maintain it.
Without an estate plan or succession plan, all assets and property related to their business will be divided up according to the laws of the state. This can result in a loss of income for family members because they will not be able to use the business assets for their benefit, or loss of the business entirely.
Female Business Owner Game Plan
To review: A female business owner should have: 1) a will that conveys her wishes about how her business and assets will be distributed, 2) a power of attorney that names someone to manage her finances and conduct business transactions on her behalf if she becomes incapacitated, 3) an advance directive that designates someone to make medical decisions when she cannot do so herself and end-of-life care preferences, and 4) a business succession plan.
If you are a female entrepreneur, success starts with a personal estate plan and a business succession plan. This combination empowers business women to protect themselves, their families, and their businesses.