Where Should Business Owners Start with Estate Planning?
By: Barry E. Haimo, Esq.
July 8, 2021
When you own a small business, you have many things competing for your attention daily. From invoicing to hiring to marketing, you have your hands full. For many small business owners, these pressing concerns overwhelm them and make it difficult to plan for the future – but that doesn’t mean you shouldn’t. As a business owner, you want to protect your business and assets too.
Estate planning for a small business owner is crucial, and having a good estate plan can help to ensure your business is protected and handled the way you want when you’re no longer at the helm. Here is what you need to ensure you’re ready as a small business owner to put together a thorough estate plan.
Why You Need an Estate Plan
Before you embark on learning how to create an estate plan, you first must understand why it’s so important to do so in the first place. While you may not want to think about a time when you aren’t active in your business, it’s this time that an estate plan is meant to address.
When you have an estate plan in place, it ensures that someone you appoint will take over your business when circumstances prevent you from doing so. With your wishes put down in writing, it can help to simplify this process for your business partners and your family.
Also, as a small business owner, your business likely is tied closely to your personal net worth. If there’s no estate plan in place and your business is put in jeopardy, it can put your family’s entire future at risk.
The Elements of a Good Business Owner Estate Plan
There are a few simple steps you can take with an attorney to create an estate plan for your small business. These include some important elements such as:
A Basic Estate Plan
The first step you should take is to create a will and a basic estate plan. This includes:
- A power of attorney that appoints someone to handle your finances if you are unable to
- A healthcare directive that appoints another to make medical decisions on your behalf if you cannot
Remember, without a will, a business is subject to the laws of the state. This could mean that it will be divided up under those laws, and that you will have no say in what happens to something you’ve worked so hard to build. Getting a will and other directives in place means you have control.
Estate and Inheritance Tax Issues
Good estate planning can also help you to reduce estate or inheritance taxes you may be subject to. You may want to work with an attorney to create a trust or limited partnership with family that can reduce the tax burden.
If you are a part of a small business with multiple owners, a buy-sell agreement must be created to specify who gets your share of the business, at what price, and under what circumstances. This can make the process after your disability or death a lot clearer for those involved.
No one wants to think about the day they’re no longer doing business, but it will come. Planning doesn’t have to be hard. Be prepared for it with the help of the attorneys at Haimo Law. Call us today to get started.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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