Estate Planning for Business Owners
Business owners have so much going on that estate planning is usually at the bottom of this list. You work so hard to build your business and to keep it running successfully, the to-do lists are endless. But one task you should have on your list is completing your estate planning. Typically with starting a business you have a business plan or some semblance of how you want your business run. Take that notion to plan for your business, personal life, and loved ones, when you are no longer here or if an accident happens. An estate plan will help to have a plan in place based on your wishes for your business, your assets, your healthcare, and peaceful transitions for your loved ones.
Of course it’s never easy to think about this subject, either the end of your life, or if you were to become incapacitated, but good planning will protect your loved ones and your business if anything were to happen to you. All of your options should be discussed with a professional, but here are the main things to consider.
Business Succession Plan
A succession plan is not inherently a part of your estate plan, but it is a crucial plan that goes along the same lines. Having a business succession plan will set in place a plan based on your wishes for the continuity of your business operations and who you want to take over. The specifics that you would include would be transfer of ownership or preparing the business for sale, an organizational structure map, daily business operations, and financial information for the business. Also aside from planning for an indefinite leave from the business, having a plan for a short term leave is a good idea as well.
Basic Estate Planning Documents
A comprehensive estate plan may be more involved depending on your personal circumstances, but some basic documents that you should have if you are a business owner include:
- Will– expresses your wishes for the division and disbursement of your assets and other property after your death.
- Power of Attorney– documenting who you want to manage your finances ensures a peaceful transition of assets as it’s clear who you have named to take over. You may name this person to manage financial transactions for your business as well, but this can all be listed in your business succession plan.
- Healthcare Power of Attorney– appoints the person who would be in charge of your medical decisions in the case of incapacity or end of life care. If you don’t have this person named legally, these decisions may be made by your healthcare provider or a person that you don’t trust.
- Living Will– lists your decisions for healthcare while you are alive and become incapacitated or unable to make decisions for yourself. Decisions can be made ahead of time for pain management, organ donation, prolonged care, etc.
Planning for Taxes
A big part of estate planning, and ultimately your succession planning, is planning for minimizing taxes. Tax laws are always changing, so it’s best to always consult a professional, especially in your own state. Your estate planning attorney will help to educate you on the best ways to avoid large taxes on your estate depending on what your situation allows and how your wealth is divided. Even if you don’t believe your estate is large enough to be taxed, there are always considerations to be aware of and you don’t want to leave your beneficiaries with a hefty tax bill.
Having the Talk with Your Loved Ones
It can of course be difficult to talk to your loved ones about these plans. No one wants to think about the end of their life or if the worst were to happen. But having a proper estate plan, while legally securing your estate is crucial, it’s also important to let your beneficiaries know your plans. Being upfront about your wishes keeps stress to a minimum during an already difficult time. As you’re preparing we have some previously written tips for how to have the conversation.
At Lexern Law Group we aim to learn your goals for both your family and your business so we can create the most efficient plans for you. Whether you need help with your succession plan, estate plan, or both, know we are here to guide you through the process. Contact us today with any questions or to get started.
Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is a substitute for, qualified legal advice. Your review or receipt of this article by Lexern Law Offices, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.