Why every entrepreneur needs to update their will after incorporating their business

Welcome back to the Bright Side. I’m back with some more tips for entrepreneurs. As an entrepreneur, you’ve poured your heart, time, and energy into building your business. You’ve tackled challenges, made bold decisions, and turned your vision into reality. But amid the daily hustle, one crucial aspect often gets overlooked—updating your will after incorporating your business.

Many entrepreneurs assume that estate planning is something to think about “later.” But the truth is, once you incorporate, your financial landscape shifts, and protecting your legacy becomes more important than ever. Here’s why updating your will should be a top priority and how it ensures your business and loved ones are taken care of, no matter what.

Your business is now a separate legal entity— It needs protection

Before incorporation, your business and personal assets were legally tied together. But once you incorporate, your company becomes a separate legal entity with its own obligations, ownership structure, and liabilities. This means your personal will may no longer reflect how your business should be handled if something happens to you.

If you don’t update your will:

• The shares of your company may not be distributed according to your wishes.
• Decision-making about the future of your company could fall into the wrong hands.
• Your loved ones may face legal complications and unnecessary stress.
• Updating your will ensures that your business transitions smoothly in case of an unexpected event.

You need to appoint the right successor for your business

As the founder, you likely have a vision for what should happen to your business if you’re no longer able to run it. Whether you want it to continue operating, be sold, or be passed down to a family member or trusted business partner, this decision needs to be legally documented.

Your updated will should include:

• A designated successor or executor who will manage or transition the business.
• Clear instructions on whether the business should be sold, transferred, or wound down.
• Provisions for any key stakeholders, employees, or business partners.
• Without these details, your business could face uncertainty, disputes, or even dissolution, leaving your hard work at risk.

Shareholder agreements & business interests need to be addressed

If you have business partners, shareholders, or co-owners, a shareholder agreement should reflect how your shares or ownership stake will be handled. Many businesses have buy-sell agreements, which outline what happens if an owner passes away. These agreements take precedence over your will.

Updating the shareholder agreement ensures:

• Your shares or ownership interests are distributed as you intend.
• Any buyout agreements with partners are legally backed.
• Your business partners have clarity on what steps to take.

By addressing these issues now, you prevent legal battles and financial complications for your heirs and business associates.

Your financial and tax situation has changed

Incorporation can significantly impact your personal and business taxes. When you update your will, you should also work with a tax professional to minimize liabilities and ensure a tax-efficient succession plan for your business and beneficiaries.

Consider:

• Corporate vs. personal assets – Clearly defining what belongs to your business vs. your estate.
• Minimizing capital gains tax – Strategizing how to minimize tax on the transition of your business.
• Life insurance policies – Setting up policies that cover any business debts and tax liabilities to provide financial security for your heirs.

With the right planning, you can protect your wealth and ensure your beneficiaries receive the maximum benefit from your hard-earned success.

Your personal and business life has likely evolved

Let’s be real—starting and running a business changes everything. Your financial situation, responsibilities, and future plans have likely evolved since you last looked at your will. 

This is the perfect time to reassess everything, including:

• Who should inherit your business assets?
• Are your personal and business beneficiaries still aligned?
• Do you have children, a spouse, or dependents who should be accounted for?
• Have you taken on any new business debts or liabilities that need to be addressed?

Life changes fast, and keeping your will up to date ensures that both your business and your loved ones are protected and provided for according to your current reality.

Taking action: What to do next

If you’ve incorporated your business but haven’t updated your will yet, don’t put it off any longer! 

Here’s what you can do right now:

• Consult a lawyer – Work with an estate planning expert to update your will and ensure it aligns with your business structure.
• Review your shareholder agreements – If you have business partners, make sure everything is properly documented.
• Consult a tax specialist – Have a tax specialist review your will and shareholder agreement to ensure there are no unexpected tax consequences.
• Consider a power of attorney – Appoint someone to manage your business affairs if you become unable to do so.
• Update your beneficiaries – Ensure that your will, life insurance policies, and any trusts reflect your current wishes.

Final thoughts: Protect your legacy, secure your future

As entrepreneurs, you work tirelessly to build something meaningful— something that lasts. Updating your will after incorporating is one of the most important steps you can take to safeguard your hard work, ensure your loved ones are supported, and create a seamless transition plan for the future.

The opinions shared in this blog are intended for informational purposes. This blog does not provide official advice, and any actions taken based on its content are at one's own discretion. It is recommended to consult your trusted advisor to address your specific circumstances.