Business and Estate Planning
If you own a business, you likely know the extensive planning required to keep operations running successfully. Just as you devote time and attention to running your business, it is equally important to create a carefully devised estate plan to manage your personal affairs in case something unexpected occurs.
Trusts and Business Entities
Several trusts exist for individuals and businesses. When deciding on an estate plan, consider the organization of your entity and your long-term goals for the business. Some common types of entities include:
- Corporation
- Limited Liability Company
- Sole Proprietorship
- General or Limited Partnership
An experienced business and estate planning attorney can recommend the best entity for your business and the right estate plan for you. The main goals for business owners in estate planning are to protect against taxes and ensure an orderly transition of the business.
Tax Protection
Tax laws, such as those in the Tax Reform Act of 2018, change frequently. Establishing a proper estate planning vehicle, like a trust that complements your business plan, can significantly reduce taxes imposed on your estate. To understand your tax obligations, obtain a current valuation of your business. Evaluating the tax burden helps determine whether your business can continue normal operations if sudden death occurs.
Succession Planning
Many business owners create a succession plan when considering retirement. However, it is crucial to prepare for unexpected events. Your estate plan can include a trustee to oversee the business and ensure it runs smoothly. Effective succession planning protects employees, maintains service delivery, and secures the interests of your estate beneficiaries.
Buy-Sell Agreement
Another key aspect of succession planning is a buy-sell agreement between business partners. This agreement serves as a blueprint for family members and business partners, establishing a sale price for equity (shares) in the business. It can also specify whether you want your shares purchased and identify individuals who should not participate in the company.
Plan Ahead
If you own a business or are thinking about starting one, it is essential to have the right plans in place for unexpected events. Contact our office to review your business structure and determine the best estate plan for your needs.
