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May 15, 2024

Business Owner Estate Planning

We deliver about 40 workshops a year to many incredible groups such as:

  • Vistage International
  • Young Presidents Organization
  • American Apartment Owners Association
  • CPA firms

Our attorneys are highly engaged with business owners right now, helping them to navigate important planning issues.

Our Founder and Senior Managing Partner, Harry Barth, put together a concise breakdown below on the estate planning issues business owners need to consider.

I see many business owners who dedicate countless hours and sweat equity building the business, but neglect to create a robust estate plan that takes into consideration all of the business needs.

Estate planning can be a bit more complex for those who own a business. Business owners must make considerations for both personal and business assets and for family members and employees. Let’s take a look at a few of the important areas for business owners to consider.

Succession planning is a big one. Owners need to make sure the business can continue without them and identify who will lead the company. The “how” of passing the business to the next individual or team is very important.

Maybe the next leader is a family member. Or perhaps it will be the management team currently in place. Those two paths could entail very different tools and strategies. In either scenario, training and guidance play a crucial role in a smooth and effective transfer.

Buy-Sell agreements are also critically important. They document your exact wishes on how your business gets transferred and can cover such areas as; incapacity, death, partner break-up and other issues. Life insurance can come into play to fund the agreement.

Like others, business owners need to ensure they have proper will and trust documents in place. Owners can transfer business interests into a trust to avoid probate. Probate can be an expensive and lengthy process that is also of public record.

Owners will also want to consider an irrevocable life insurance trust or ILIT. This planning tool is utilized to remove life insurance proceeds from your taxable estate. The life insurance proceeds can be used to pay taxes or injected into the business.

The power of attorney document is critically important for owners because the owner can appoint an appropriate person to manage the business if necessary. Your healthcare directives are equally important. They appoint someone to make medical decisions for you.

Conducting ongoing appraisals to determine the value of the business is crucial. This comes into play for tax purposes and with the buy-sell agreement. In the case of the latter, to ensure the agreement is properly funded.

If you’d like to get on a Zoom or phone call with an attorney from my team for an initial complimentary planning assessment, click this link. And you don’t need to be a business owner, we’re happy to help anyone who needs to get organized and updated.


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