It can be hard to think about death, and even harder to imagine how life will continue after you pass away. Unpleasant as it may be, have you thought about how your family will manage without you? How about your business? Do you know how to maximize the amount of money you leave behind, and how to make sure it ends up in the right hands? You may not realize that a poorly planned estate can cause major issues for the people closest to you.
Business owners have unique estate planning needs. In addition to thinking about the future of your assets, it is equally important to consider the future of your business. These estate planning tips can be instrumental in protecting what matters most: your family, your business, and your legacy.
Have a Will in Place
A Will can ensure that your estate is divided according to your wishes. If you pass away without a will, your estate will be divided and distributed according to the laws in your particular state. A Will can also name a guardian for children under 18, appoint a trusted person as the executor of your estate, and address any circumstances that are unique to your life.
Establish a Trust
Following your death, any possessions owned in your name alone will go through probate, which can be a costly and time-consuming ordeal. You may be able to bypass probate if you transfer ownership of your assets to a trust. A trust can also help protect your minor children by providing for the financial management of your assets. Generally, Trusts will make the entire process of easier for your heirs.
Have the Right Provisions in Your Operating Agreement/Shareholders Agreement
For businesses with multiple owners, it is crucial that your operating agreement or shareholders agreement contain a mechanism for redistributing an owner’s interest in the event of death or disability. Often owners want the option to buy out the estate of the deceased or disabled owner. There should also be provisions that specify how the value of the business will be determined and how the proceeds will be paid. It is important that your will and your operating agreement/shareholders agreement properly coincide with each other. Should there be any discrepancies you can be causing unnecessary issues for both your family and your business partners.
Minimize Taxes and Retain Income
Transferring your estate assets to a trust upon death is a way to minimize the tax liability of your estate and will help keep your wealth in the family. Proper planning is key for wealth protection and to the continuation of your business.
You should check wills, trusts, and other parts of your estate plan periodically to ensure they are up-to-date, especially in light of major life events like marriage, divorce, and the birth of a child, as well as, any changes to the law. If you do, you can avoid letting your assets go to the wrong beneficiaries.
Create a Succession Plan
A comprehensive estate plan for a business owner will also include a formal, written succession plan that allows for the seamless transition of the business and avoid unnecessary interruptions to its operations. You should establish a plan that identifies key individuals who can assume executive and/or managerial duties, including family members. The overarching goal is to choose the most capable individuals to run the business. A well thought out succession plan will clarify how ownership will be transferred, establish rules for hiring, compensating and promoting family members, and specify how disputes will be resolved. Of course, be sure that everyone with a role is aware of the plan. It is also important to be sure customers and vendors know who has the authority to act on behalf of the business.
When it comes to your estate, a little peace of mind goes a long way. Contact Ser & Associates for professional advice on setting up the estate plan for you. We’ll help you make sure your business, your family, and your legacy can prosper long after you’re gone. You can contact us at 305.222.7282 or Info@Ser-Associates.com.
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