Usually we only think of estate planning for people.
But have you ever thought of estate planning for your business?
Well, if you are a business owner, you should.
Because if there is no plan in place when a business owner dies, the survivors are left without direction. When that happens, not only does chaos ensue, but the estate ends up paying more in taxes than is necessary. And sometimes, the business will fail, or your heirs will be forced to sell it for less than it is worth.
As a business owner, you’ve worked hard to build what you have. That took planning and execution.
So does providing for what will happen to your business when you are gone.
Estate Planning. A Valuable Tool for You and Your Business.
Estate planning is a tool that you can use to preserve and pass on your business.
Proper estate planning can help in making sure that all the equity you built up in your business during your lifetime is not lost when you die or become incapacitated.
It is important to understand that when you die, a “death tax” will be imposed on your business. If you die without having made an estate plan, anywhere from 35 to 50% of the business value will be taxed —and the money is due within nine (9) months of your passing! For many small businesses, this often means that the business must be sold below its value in order to pay the death tax within the short timeframe.
With an estate plan in place, you can minimize the amount in taxes that have to be paid. To find out how you can minimize death taxes for your business, speak with a competent and experienced trusts and estates attorney.
Planning ahead allows you to decide how to transition your business upon your death.
For example, if you have partners or co-owners in your business, you will want to decide what happens with your interest if you die. Because many partners do not want to go into business with people they have not chosen to be partners with (i.e., the spouses or children of their partners or co-owners), one tool frequently used is that of the buy-sell agreement.
A buy-sell agreement ensures that upon the death of any owner, his or her interest is automatically purchased by the other owner(s). It prevents the beneficiaries of the deceased owner (that person’s spouse, children or other family members) from becoming owners, part-owners or partners in the business.
These are only 2 of the many ways in which estate planning can help you preserve and protect your business when you are gone.
Like any good business plan which anticipates the future, estate planning is another aspect of good business. And having one makes good business sense.
Estate Planning Attorneys.
At Esser, Bradley and Khalsa, our estate planning attorneys will work with you during a FREE consultation to discuss your specific needs. Don’t wait! Contact us today to set up your free appointment.