Estate planning is a good choice if you own a business and are worried about its future. Many people have been thinking about estate planning for a long time, but they haven’t jumped on it. There is no rush, but you must plan your estate if you own a business and want its future security. Also, an estate plan comes with many benefits for a business owner, so if you are a business owner, it can be helpful for you. We strongly advise all the business owners to go with estate planning for your business as it is essential.
You have spent your whole life building a business, and you wouldn’t want it to vanish after your death, right? Yes! Your business can be harmed without an estate plan because now you aren’t here to run it. In this case, whoever will be in charge will drive your business as they want. Estate planning can give you the power to manage the future decisions of your business. Also, it can save you from many tax implications, and you get the benefit of picking the proper beneficiary or person who will take over in your place. Estate Planning can be advantageous to any business or company.
Estate Planning for Business
It doesn’t matter if you have a small business or the most prominent company out there; estate planning can give you peace of mind and a shield to protect your assets. Anybody who owns a business can easily benefit from estate planning. Unfortunately, many small business owners think it is expensive for their business and keep pushing it away. A study has confirmed that more than 30% of business owners don’t have an estate plan. A business estate plan means covering your business-related issues according to your wishes.
Benefits of Estate Planning for Business
- Options for business – Having good estate planning can make a lot of a difference. For example, have you ever considered setting up a buy-sell agreement and taking out a buy-sell insurance policy? If you have partners in your business, can you imagine inheriting one of their family members as a partner, especially one that knows nothing about your business? This form of planning can be helpful, especially once your business partner is no longer around. This will allow an insurance policy to buy out your partner’s shares, paying their family at death, leaving you their claims in the business.
- Suitable for long-term business – You had an idea, a dream, and today, you own a major corporation that is super profitable. Having a good estate plan means covering the basis of who can make business and financial decisions if you’re ill or mentally incapacitated. A good estate planning attorney will consider all future scenarios and include a Durable Power of Attorney into your planning for insurance. Then, while you are in the right state of mind, you choose who will run your affairs if one day you’re not able to. They will also potentially set up trusts to create a layer of asset protection and a vehicle for the pass-through of assets to the next generation.
- Suitable for tax mitigation – You built a business, got it to be profitable, and now you wish to safeguard this asset for your children and grandchildren. Your business is part of your estate, and a liquidity event occurs at the time of death. A good estate planning attorney will account for this and create a legal structure to minimize your tax exposure.
- Good future planning for business – Estate planning does give you the power to choose a business plan for the future. You can pick the person who will run your business, how you wish them to operate, and even mandate a holiday party in your honor once a year if you want to do so. You can create strategies that the company must follow and even dictate benefits for family and co-workers. This doesn’t mean that you should, as none of us have a crystal ball and can see into the future. Good planning should leave room or flexibility for adjusting to current times, but it’s nice to know you can control some aspects of your business even when you’re no longer around.
- Business Succession – People may try to take advantage of the moment for personal gain after your death. You may find you’re your spouse and children fighting over assets and businesses. Avoid this and take control; create an estate plan dividing and giving assets as you see fit to those that matter to you most. Perhaps you have a business you want to leave to one child and an insurance policy to the other. Maybe you have a vacation home that you wish to be sold and profits evenly distributed to your kids. Take control, come up with a plan and have an estate planning attorney write it.
Estate planning is for everyone. If you have a mom-and-pop liquor store or a chain of restaurants, you and your loved ones can benefit from estate planning. Estate planning can be as simple as who runs my business if I’m ill to as complicated as selling assets and distributing money after I’m gone. It can be as simple as leaving everything in equal shares to your children to as complex as reinvestments of assets and controlled distributions based on specific life accomplishments of your children. For example, you wish your estate to distribute the money necessary to cover a wedding or down payment for the first house but not to pay for a two-week vacation.
In the end, we have told you the benefits and importance of estate planning for a business. We are here to guide you with all types of estate planning queries. You can contact us to set up a free consultation with one of our experienced lawyers who can help you create a custom-tailored plan. Sometimes planning an estate can be a little tricky. We are here to help.