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? What 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 problems for the people closest to you.
Entrepreneurs have unique estate planning needs. In addition to thinking about the future of your own assets, it’s equally important to consider the future of your business, too. Finding the right estate planning attorney can have a big impact on an entrepreneur’s ability to plan.
These estate planning tips can be instrumental in protecting what matters most: your family, your business, and your legacy.
- At a Minimum, Have a Will
The act of writing a will comes highly recommended in many estate planning circles—and for good reason. When you pass away without a will, your estate is divided and distributed according to the laws in your particular state. That means the assets granted to your spouse, children, and other relatives are left to a court’s discretion. A will can ensure that your estate is divided according to your wishes. It 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.
- Use Buy-Sell Agreements
For partnerships or businesses with multiple owners, it is crucial to set up a buy-sell agreement. This document establishes a mechanism for redistributing an owner’s interest in the event of death or disability. There are different types of buy-sell agreements (including cross-purchase and stock-redemption) but each will allow the remaining owners to redeem the stake of the departing owner. This agreement will also specify how the value of the business will be determined. Such an agreement is also helpful if an owner declares bankruptcy or is going through a divorce.
- 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 possessions to a trust. A trust can help when you don’t want your minor children to inherit your property directly; you want to prevent your property from going to your adult child’s ex-spouse; or you simply want to make the process easier for your heirs.
- Minimize Taxes and Retain Income
Depending on your individual goals, there are many succession plans that can be put into place to phase you out of the business while you still retain a desired level of income or control. One strategy is to create a grantor retained annuity trust (GRAT) which is a type of trust that will allow you to transfer your business assets to your children while keeping your own source of income. Transferring your estate assets in this way can minimize your tax liability and help to keep your money in the family.
- Update Frequently
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. If you do, you can avoid letting your assets go to the wrong beneficiaries.
- Seek Reliable Advice from a Qualified Professional
In many cases, the estate planning for an entrepreneur may be infused with both individual and business issues. This is why it’s so crucial to identify an Attorney who understands that and works to create a comprehensive and personalized plan for the business owner.
Entrepreneurs pour their heart and soul into their company. Determining the most appropriate way to protect it is equally important. Make sure you identify an estate planning Attorney with experience helping individuals as well as business owners with estate planning and succession planning needs.
- Create a succession plan
A comprehensive estate plan for an entrepreneur will also implement a formal, written succession plan that allows for the seamless transition of the business. It is critical to establish new owners and identify 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.
When it comes to your estate, a little peace of mind goes a long way. The right lawyer can help identify the best opportunities for you to move forward with your estate planning while keeping the future of your company in mind as well.
Call Ser & Associates for professional advice on your will and estate plan. We’ll help you make sure your business, your family, and your legacy can prosper long after you’re gone.
