Most business owners juggle many different tasks every day. While estate planning may cross your mind once in a while, it’s often a subject that takes a back seat to more immediate matters. However, planning for the future is crucial if you want to ensure your interests are protected and your family is well taken care of after you are gone. An estate law attorney who is experienced in working with business owners can help you create a plan that is tailored to meet your specific personal and professional concerns.
Why Do I Need an Estate Plan?
Everyone can benefit from estate planning, but it’s especially critical if you own a business. Along with business succession planning, it can help to ensure that your company survives should you become incapacitated or pass away. A well-crafted estate plan makes it easier for your loved ones to make important decisions on your behalf if necessary.
In addition, your estate plan lays out your wishes and makes the distribution of your estate run much more smoothly, and can help your family avoid the headaches and extra costs of probate. Business succession planning lawyers are usually well-versed in estate planning and can help you create a comprehensive plan that addresses all your needs. Your lawyer can also help you understand how a well-crafted estate plan can help minimize your heirs’ estate and inheritance taxes after your passing.
Estate Planning Basics
Most estate plans include vital documents such as:
- Power of attorney for health care
- Power of attorney for finances
- Advance directive
- Last will and testament
Life insurance is also a must for business owners. Have your attorney review any existing life insurance policies, or talk to them about the amount and type of insurance to get. It is also a good idea to purchase disability insurance, which provides coverage if you suffer from a long- or short-term disability.
Another estate planning tool to consider as a business owner is a trust. For example, if your spouse has power of attorney to run your business, in many states they are not allowed to use any business assets to their benefit – even paying themselves a salary unless it is approved by the court. However, if you put business assets in a trust, your spouse would be able to access them without court approval.
A buy-sell agreement enables you to set a sale price for your business and your share of the business. You can also specify whether you want any partners to buy out your share or prevent certain people from having a role in the business in the event of your passing. Regardless of whether partners or an outside party is purchasing your business, having a business contract lawyer draft a buy-sell agreement can make things much easier for your beneficiaries, as they will know the value of your business or your share.
Sorting Out Family Issues
If you are the owner of a family business, you probably already know that working with the ones you love can be challenging. Things can quickly get messy when a business owner dies – in many cases, some adult children may be involved in the business, while others are not. It is important to determine and specify how you want your assets to be divided and distributed. Each family situation is unique. Talking to your attorney about your wishes can help you determine the best way to distribute both personal and business assets in a “fair” manner.
For instance, if you own a retail store and your daughter is interested in taking over your business but your son is not, you may want to consider bequeathing the business to her and other non-business assets to your son. Although conversations about estate planning with family members and business partners can be difficult, keeping lines of communication open can benefit everyone in the long run.
Regardless of what type of legal issues you may be facing, our team of business attorneys, estate planning attorneys and real property lawyers work collaboratively to help you find creative solutions.