Should Selling Your Business Be Part of Your Estate Plan?
By: Barry E. Haimo, Esq.
September 2, 2021
Estate planning is something everyone should undertake, but is especially important for business owners. During this process, you can take advantage of planning tools that fit your needs and goals. In most cases, business owners use estate planning and business planning to dictate what happens to the business if they become incapacitated or die, such as passing it on to a partner or family member, but there’s something else that should be considered: selling the business.
There are many scenarios under which a person should consider selling their business instead of passing it on in their estate plan. Here are considerations you should make when deciding whether to sell your business or not as part of your plans.
When You Should Consider a Sale
Many people use their estate planning to form a succession plan for their business, but there may be times this isn’t warranted. You may want to consider making the sale of your business part of your planning if one of these things is true:
- You have no legal heirs or living relatives to pass the business on to
- Your beneficiaries or heirs have no interest in running your business after you are gone or no one who is interested has the expertise, experience, or skills to successfully manage it
- The vision you have for your business requires it to be operated by a third party or someone with expertise in the industry who you’ve already identified – and they are not in your family
- The money your family will require to live after you pass away exceeds the income generated from the business and selling the business would help to sustain them more appropriately
- You have financial obligations or claims by creditors that will require the business to be sold in order to pay
- The valuation for your business is at its height and you don’t want to take the risk of having stock or assets sold at a later time when the valuation may not be so high
Are There Other Options to Consider?
You should meet with an experienced financial planner or estate planning lawyer to review all of your options. Aside from possibly selling your business as part of your estate plan, you may want to also consider the use of trusts to help more effectively plan for taxes and other issues related to your estate. Trusts have several benefits, such as ensuring that what you leave your family is distributed in the way you wish, protecting the inheritance you leave behind from divorce, and the expertise of an independent trustee to help manage your assets.
You also might want to look into charitable giving. Many sophisticated techniques can be used in charitable giving, depending on the nature of your business, your tax situation, the amount you will get from selling the business, and who will receive the donation.
Estate planning can be complicated, especially for business owners. But it doesn’t have to be that way. The experts at Haimo Law can help you to understand all of your options and ultimately choose the path that best suits where you envision your business going once you are not around to run it.
Whether that involves a sale or not, don’t let the business you’ve worked so hard for fall into chaos. Protect your business and assets, and gain peace of mind knowing you’re prepared and fully in control. Call us to get started today at 954-228-3369.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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