Estate planning is a good choice if you own a business and are worried about its future. Many people seem to talk and think about estate planning for a long time yet seem to never get around to the actual planning. While many people believe there is no rush as they are young or the business isn’t making millions of dollars, it is never too early for estate planning. When it comes to estate planning for businesses, there are many benefits to having a good estate plan. We strongly advise all the business owners, at a minimum, to consult their local estate planning lawyer to better educate themselves on how estate planning can best benefit them.
You have spent your whole life building your business; don’t you want to control who takes over your business and perhaps even how it runs after your death? 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 money when it comes to taxes, and you get the benefit of picking the right beneficiary or person who will take over in your place. Estate Planning is an excellent idea for all types of businesses and companies, small or big.
Estate Planning for Business
It doesn’t matter if you have a small business or the most prominent company. Estate planning can give you a layer of protection and peace of mind. Anybody who owns a business can easily benefit from a good plan. However, it is essential yet often overlooked due to worries of costs associated with creating a good estate plan. According to a study, more than 30% of business owners don’t have an estate plan.
What goes into a good business estate plan?
- Revocable Trust – Creating a Revocable trust and transferring ownership of your business and its assets to confidence comes with many benefits. For starters, it creates an extra layer of asset protection, for example, in the event of a lawsuit. Secondly, it allows you to name your successors and even designate their rights and roles when it comes to the operation of such said business. Finally, with a properly drawn-up estate plan, you can use tax mitigation strategies to preserve more of your hard-earned wealth for your heirs.
- Durable Power of Attorney – When it comes to estate planning for your business, one of the best documents that you can create to work during your lifetime is a durable power of attorney. This document will allow and empower the person of your choosing to run and operate your business if you are incapacitated and unable to do so for yourself.
- Buy-Sell Agreement – Most businesses consist of two or more partners. This part of your estate planning can help ensure that neither you nor your partners inherit one another’s none working family members as operating partners in your business at the time of death. Instead, at the time of death, there typically would be an insurance policy to compensate the heirs of the deceased. This part of planning is essential and frequently overlooked. Can you imagine inheriting a new partner that knows nothing about your business or how it operates yet takes home an equal salary?
Benefits of a good business estate plan
- You get to choose who inherits your business,
- You can control how your business operates even after you go,
- Estate Planning creates an extra layer of asset protection for your business,
- You can take advantage of tax mitigation strategies for your business.
Estate planning might not be able to guarantee the future success of your business. There is always the chance that your successors will not be able to fill your shoes, even if they are handpicked. However, it is always best to take control and appoint your beneficiaries and create a plan for the future operation of your business. After all, you are the visionary.
In the end, we have told you the benefits and importance of estate planning for the business. We are here to guide you with all types of estate planning queries. In addition, you can contact our office to set up a free consultation to speak to one of our experienced estate planning attorneys. Planning your estate can be tricky, and many potential considerations can be overlooked without the proper knowledgeable person guiding you through the process.