Estate planning can be complicated for anyone. For business owners, this process can seem even more daunting. In addition to likely having more diversified income and assets, business owners have to deal with the complications of transferring their ownership interests.
Although business ownership does add some complications, with some legal counsel and assistance from an experienced estate planning lawyer, you can create an estate plan that transfers your business ownership and other assets efficiently.
By keeping in mind these three important considerations, you will be better positioned to create a sound estate plan involving your business interests:
- Your business’s succession plan: If your business already has a succession plan in place, that will have to be considered when drafting your personal estate plan. Especially if there are multiple partners and owners, they will likely have some say in how ownership interests are transferred. It is critical to be up to date on the succession plan before officializing any transfer of ownership interests.
- Taxes and fees: It is important to consider the tax penalties and costs of passing on of your business ownership interests in your estate plan. It is important to note that the value of your business could increase between the time you create your estate plan and the time that it goes into effect. Transferring your interests during your lifetime could help minimize the costs, but you may not want to lose your income source. There are trusts and other instruments available to help you obtain your goals in the transfer of your business.
- Management issues: In addition to passing on your ownership of a business, you might want to retain some oversight regarding who is hired to handle management and day-to-day operations of the business. In many cases, a business owner will pass on the business to a spouse or children but will want someone else to be making the steering decisions for the business. There are ways to obtain these goals with trusts and other legal instruments.
Whatever it is you want to achieve with your estate plan, an experienced attorney can talk through your goals and create a strategy that will work most efficiently for you.