Understanding Modern Estate Planning for Business Owners
For many small business owners, family and business life is intertwined.
Where one starts and the other ends often overlaps. This is often the case with personal Modern Estate Planning and Small Business Modern Estate Planning. Here are 4 critical steps to help Business Owners understand their Modern Estate Planning responsibilities to their business.
Step 1 – All businesses need a backup plan
All business owners need a continuation plan for their business in case the Owner or Director is unable to continue to make business decisions, due to an unexpected sickness, injury or absence.
Modern Estate Planning for Business is really about understanding which business structures are seen as one-and-the-same with the business owner, and which business structures are seen as separate-and-distinct from the business owner.
Step 2 – Understand when you can appoint another to act on your behalf
When a business owner is a Sole Trader or part of a general Partnership, their personal control of the business can usually be exercised by others if needed through the use of a Power of Attorney or a Power of Enduring Guardianship.
Step 3 – Understand when you cannot appoint another to act on your behalf
When a business owner is a Director of a Company, the power of a company Directorship cannot be exercised by others or transferred or 'gifted' by a Will, a personal Power of Attorney or Power of Guardianship.
A separate Company Power of Attorney needs to be put in place by the Company to appoint another person (or company) to act on behalf of its Director, if they are unable to continue to make company decisions due to an unexpected sickness, injury or absence.
Step 4 – Company Directors must take action now
A company Director should have the company appoint someone to act on its behalf through a Company Power of Attorney to sign documents and manage the continuity of company affairs.
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7 Myths About Modern
Estate Planning
Modern Estate Planning
What is Modern Estate Planning?
You may not think you are the type of person who has an estate, but everyone does—because an estate is simply everything you own: a car, a house, a savings account, and furniture. Regardless of your level of wealth, you should have a plan in place so things won't be difficult for your family, friends (and even business partners) if something happens to you.
Modern Estate Planning is ultimately about protecting and providing for yourself and your family by putting a documented plan in place, just in case.
For business owners and their families, Modern Estate Planning also extends to protecting and preserving the value of a business, how to protect its debts, and ultimately how to buy time if you're forced to sell it due to extended sickness, injury — or unexpectedly passing away.
The process legally documents your wishes about who can make decisions for you when you cannot, who can make major health and lifestyle decisions for you when you can no longer make them yourself and documents your wishes for any dependent children and your final wishes about who should inherit your estate.
For Individuals, the process involves creating at least three legal personal documents
Modern Estate Planning in NSW is generally made up of 3 legal documents; you guessed it – Wills, Powers of Attorneys & Powers of Enduring Guardianship.
For Business owners, the process may also involve creating an additional legal business document:
To ensure the security of these physical documents, lifetime document storage is included with a National Secure Document Storage service for all our Sapience Modern Estate Planning clients.
Who is Modern Estate Planning and Wills for?
Everyone over 18 years of age.
Everyone has different needs and risks to manage depending on their relationships and business structures
- Single people may focus primarily on preserving their independence through the use of a Power of Attorney and Enduring Power of Guardianship document. A Simple Will may initially be suitable for their needs if the balance of their assets, super, and insurances are under $1,000,000 in value.
- Families may have to consider the interlinking of each member's estate planning tools and how they can work together through Powers of Attorney and Powers of Enduring Guardianship documents, and later their Wills.
- People with dependant children (and frail aged parents) may also need to consider who to nominate as a future potential Guardian for any dependant children, and when Nominating Beneficiaries in their Wills, whether they need to consider the future risks these beneficiaries may face — divorce, bankruptcy or addictions — and whether a Protective Will is more appropriate for their needs?
- People with stepfamilies, blended families, and past relationships will also need to consider often competing interests and whether an additional Contractual Will Agreement is appropriate.
- Business Owners face additional needs as different business structures will dictate whether their personal estate planning tools can be used to make emergency business decisions, or whether a specific company power of attorney is required.
The complexity of modern life is why you need a Sapience Financial advisor to help you get clarity and your estate planning documents finally sorted.
Key Estate Planning Every Person & Business Owner Needs to have
Individuals
Single or Single again
- Power of Attorney document - All states
- Enduring Power of Guardianship
- Simple Wills & Protective Wills
- Medical Competency Acknowledgement
- Letter of Wishes
Families
Traditional, Blending & Diverse
- Powers of Attorney document - All states
- Enduring Power of Guardianship
- Simple Wills & Protective Wills
- Contractual Wills
- Medical Competency Acknowledgement
Business Owners
Partnerships & SMSF
- Company Power Of Attorney
- Partnership Agreements
- Special Provision transfer company share ownership
- Special Provisions Business Buy-Sell Option
- Medical Competency Acknowledgement
When should you get your Estate Planning documents sorted?
Simple. When you turn 18 and want to be in control of your own life, when others depend upon you, and whenever you are in business.
- Modern Estate Planning protects you now while you are alive with Powers of Attorney (think traveling overseas and uncontactable), and Enduring Power of Guardianship (think unconscious in hospital after a serious car accident) in case you're sick or injured or unable to make key decisions for yourself.
- Modern Estate Planning protects your personal estate later and ensures your estate and any insurance entitlements, go to those you care about and who care about you — not the Tax Man.
Download: Start thinking about your own Modern Estate Planning needs. Download our Modern Family Tree worksheet. This editable PDF can help you collect important information and see the interrelated family relationships to be navigated, as you get ready to talk with us later.
Why do we provide both Modern Estate Planning & Life Insurance services to our clients?
Simple: Neither solution is complete without the other.
- Estate planning and Life insurances are intertwined because they both focus on helping people return to normal after an unexpected sickness, accident or long-term disability.
Estate planning and Life insurances also work side by side to protect families, loved ones and for business people – the value in their business, from the financial effects an unexpected death would bring to your family and the commercial domino events this would trigger in a business.
- For most of our Life Insurance clients, getting their Modern Estate Planning sorted is the natural next step to having all their important documents of life, love and business all in one place.
- For most of our Small Business clients, understanding different business structures bring different levels of personal liability, and making sure their Modern Estate Planning protects their family, from the business, is their natural next step.
- For our Small Business Company clients, there are different Modern Estate Planning requirements needed for Company Power of Attorney documents, that cannot be addressed through a personal Power of Attorney document.
Arranging your Life Insurance and Estate Planning needs together makes good sense and updating them when major life changes occur, becomes easier.
Your family's estate planning is too important to leave for a DIY approach on a lazy weekend, or when you have time ... sometime... next year, maybe.
A Special Note for Blended & Blending Step Families
Are you part of a modern blended family?
- In 2021, Australia had 8.5% of couple families with children in stepfamilies and 3.5% in blended families.
The more complicated the family structure, the more likely nobody has started to get the estate planning in place — not because they don't understand or value the importance of Modern Estate Planning, but usually because complexity creates overwhelm.
This is where the Sapience Financial Modern Estate Planning service can bring clarity to your situation.
It's time to get your estate planning finally sorted
Up until now, getting both your key legal documents for estate planning in place as well as your personal risk insurances has been a fractured and difficult process, with many people simply putting off completing these important decisions to a future easier time, that never arrives.
As a result, they often end up living with a low level of anxiety until it's sorted.
- We believe your Sapience Financial advisor is uniquely placed to understand your personal situation more than a one-off chat with a random solicitor you have no ongoing relationship with.
- Our Modern Estate Planning Service provides a premium complete solution for busy people who need to get their modern estate planning and key business documents in place without having to go to a physical office to do so.
- All our legal documents are drafted by a specialist Estate Planning & Taxation Australian Law firm and are protected by legal professional privilege and professional indemnity insurance.
- We have a National Secure Document Storage service available which removes concerns about lost Wills or future allegations of tampering with documents.
The Difference between Estate Planning documents & Key Legal documents
There are two main types of legal document we'll all need during our personal lives, family lives, and even business lives.
- Structure documents – often called Estate Planning documents – that clearly outline our own important life decisions – like appointing a Power of Attorney, nominating Legal Guardians for dependant children, and creating Wills.
- Agreement documents – often called Key Legal documents – that clearly outline agreements and reasons that usually have longer term consequences for others - like documenting family loans, changes in blended family relationships and specific decisions, obligations, and responsibilities.
All these documents are available to be built and purchased through our Sapience Secure Customer Portal with the assistance of your financial adviser.
Pro Tip for Small Business Owners: Personal estate planning is separate from business estate planning and the duties of a Director. Learn about a Company's Power of Attorney here.
How we can help
We understand starting the process that is Modern Estate Planning can initially feel anxiety creating, especially if you're attempting a DIY solution to the second most important decision of your life. Benefit from our experience. Reduce your stress and overwhelm, and find peace of mind – and pride – for finally ticking this most important task off your list of things to do yesterday.
Modern Estate Planning documents and strategies are a vitally important part of protecting yourself, your business, and your family. All these documents are available to build and purchase through our Sapience Secure Customer Portal with the assistance of your financial advisor.
Contact us for a confidential chat about your needs.
Related: Modern Estate Planning
- Singles - single and single again
- Families - couples, partners, defacto, married, possibly with kids, CNM
- Small Business Owners - side gigs, sole traders, partnerships and companies
