You and your spouse live together, work together, and likely spend much of your free time together. Having a successful marriage and business takes hard work and dedication, but it can also be among the most rewarding things in life. To help keep you on the right track, here are a few tips.
- Create separate budgets for your family and your business. Money can be a tense topic, even for the average married couple. With a family and a business to run, the two of you need to sit down and agree on a budget for your family and a budget for your business. By having open and honest communications about your finances, both personally and professionally, you can stave off more heated conversations.
- Keep work at work. While your business is likely the primary source of your family’s income—and often the main thing on your mind it is vital to create a boundary between your work life and your home life. If your business has a physical location outside your home, establish a rule that you and your spouse will discuss business only while you are at work. If you and your spouse are running a home-based business, you can establish “business hours,” and any time outside those hours is considered personal time, during which business will not be discussed. Regardless of the approach you use, it is essential to have sufficient time to accomplish your work.
- Have your own hobby. Because you probably spend a lot of time together, each of you needs to take time alone to do something you enjoy. This can be as simple as carving out time to take a long, relaxing bath or join a local soccer team. Having your own hobby allows you to tap into another part of yourself and take a break from your usual routine. Studies have also shown that individuals with hobbies they enjoy tend to have lower blood pressure, are less stressed, and are happier overall.
- Have your estate plan prepared or reviewed. Like any other couple, business-owning spouses need estate planning to protect each other and help ensure a financially secure and prosperous future for their loved ones. When a couple works together in a business, their financial picture and overall goals may be complicated and intertwined, making proper estate planning an even greater necessity. Below are some of the basic estate planning tools you need to protect yourself, your family, and your business.
- Revocable living trust. With a revocable living trust (often referred to as a trust), your money, property, and even your interest in your business are held by the trust rather than by you. While this may seem scary, it does not mean you are giving up control. In creating the trust, you can name yourself as the trustee (the one in charge of managing the money and property, including your business interest, which is owned by the trust) and as the current beneficiary (the person who gets the enjoyment from the money, property, and business). The primary benefit of having the trust own your money, property, and business is that, when you die, these assets pass to your designated beneficiaries without having to go through probate court proceedings. Also, suppose you are ever unable to manage your affairs while you are alive. In that case, the successor trustee you appoint can easily step in and take over management of the trust assets (including your business interest), thereby preventing unwanted disruption. Both advantages will save your family time and money and can keep your personal affairs private.
In addition to avoiding probate, a trust allows you to provide some instructions for the future of your business. It can address questions regarding who will run the company if you cannot and continue after your death, whether the next generation is ready to step up and lead, and whether you want to provide for a beneficiary not involved in the business.
- Financial power of attorney. By default, no one (not even your spouse) can make financial or legal decisions for you during your lifetime unless you legally select someone through the creation of a financial power of attorney. If you do not make this choice through proactive legal planning, the probate court will appoint someone for you, often through a public and costly proceeding. Although your spouse may be the best person to decide on you and your business, they need the appropriate authority to do so. Executing a financial power of attorney can facilitate a smooth transition during a stressful and emotional time if you are unable to make decisions for yourself.
This document is essential if only one of you is the legal owner of the business, even if both of you consider yourselves partners. Although the other spouse may be intimately familiar with the operations, they can make no decisions that may be necessary to keep the business going without the proper authority.
- Medical power of attorney. As with financial matters, no one has the authority to make medical decisions for you during your lifetime unless you select them through proactive estate planning (via a medical power of attorney) or the court appoints them. If you cannot communicate your wishes when an emergency arises, the person who will decide your course of treatment must be someone you trust. If you leave the decision up to the court, it might appoint a person you would not have chosen.
- Limited liability company or other business entity. Depending on how your business is structured, part of the planning process may involve reviewing your business structure to ensure it has been set up in a way that offers maximum asset protection, tax benefits, and ease in transitioning ownership to the next generation. One common way to achieve these benefits is by operating your business through a legally recognized business entity, such as a limited liability company (LLC). As part of your estate plan, you may then transfer ownership of the LLC to your living trust to help secure the advantages of a living trust outlined above.
Having a successful marriage and a thriving business requires hard work. Call the attorneys at Altman & Associates at 301-468-3220 or via the website at altmanassociates.net to ensure that your family and business are protected if unforeseen circumstances befall your family.
