When starting up a new business, many entrepreneurs don’t necessarily consider estate planning and writing up a will as part of business planning.
However, once your business is up-and-running, it becomes an important part of ensuring the legacy of your company. Furthermore, it protects your loved ones and outlines plans for your stake in the business for your partners.
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In a webinar sponsored by Absa, host and media entrepreneur Verashni Pillay unpacked this topic with two experts. The guests were Absa Interim Head of Fiduciary Advisory and Fulfilment for Absa Trust Johan Barnard and legaltech entrepreneur Sinal Govender.
Govender is the co-founder of and Head of Legal at Life.File. The startup allows people to create, store, and share legal files through a web app.
Barnard looked at tips and tools for business owners when it comes to business owners — as well as the mistakes many entrepreneurs make.
He also gave the audience the primer of trusts — the use cases for creating them, and why they shouldn’t be used as a tax avoidance mechanism.
Meanwhile, Govender also looked at some of the mistakes that business owners make when it comes to succession planning. She noted the importance of a shareholders agreement and introduced some of the things entrepreneurs need to know about intellectual property.
Key insights on the importance of wills for entrepreneurs and business owners
The webinar helped debunk some of the assumptions that business owners and the general public make about wills and estates.
There are also the human pitfalls that come with estate planning — such as the assumption that we just don’t need a will.
“We forget that we are not immortal,” Govender noted. “And our death is going to impact both our family and our businesses.”
She highlighted how the availability of original documents, service delivery, and other unforeseen delays can affect the winding up of an estate — which may leave a business or family in a crisis.
Barnard used his expertise to share some quick insights on how trusts should be used by entrepreneurs and individuals.
“If used correctly, trusts still make excellent business sense from an estate planning perspective and that is then used to house your assets and then obviously to build generational wealth,” Barnard said.
However, he emphasized that trusts are not a tax avoidance mechanism.
“I always say it’s asset protection that needs to be highlighted, not tax avoidance. And I think if you get that principle right, the trust is still a fundamental tool.”
Both Barnard and Govender went on to explain some of the implications around being married in community of property, the consequences of lacking shareholders agreements, and other important topics around estate planning.
To hear more about the panellists’ insights, you can catch up on the webinar below:
Feature image: Scott Graham/Unsplash