Estate planning is important regardless of age or familial status, but it is especially important for business owners. Not only do business owners need to plan for the distribution of their own personal assets, but they also need to take special steps to help ensure proper handling of the business.
These steps can include:
- Put together a succession plan. What is the future of the business? It is important to put together a plan outlining goals for future leadership, potentially even naming a replacement. This is an important part of the process that helps to better ensure business operations can continue and often looks similar to an initial business plan.
- Consider a trust. This legal tool uses a named individual, the trustee, to oversee the assets in the trust. If a business is in a trust, that trustee can help to ensure a smooth transition, so business operations continue with minimal negative impact. This saves the business from getting stuck in probate or other legal processes when it needs to transfer to a new owner.
- Don’t forget taxes. Tax laws, at both federal and state level, can impact your business. You can use different estate planning techniques to minimize your business’ and estate’s tax obligations. These can include the trust discussed above or setting up a family limited partnership.
Like all estate planning efforts, things tend to go best if the goals are discussed with the impacted parties. Open communication can help to reduce the risk of a challenge to the plan, which could lead to costly litigation.