Do you think estate planning for small business owners is something to consider? Ever wonder, how can I use estate planning for my small business? Do you have an LLC? We all would like to live long enough to see our life’s work become successful, but there are no guarantees.
Legal Scoops’ recent article entitled “3 Ways Estate Planning is Used in Small Business” says that estate planning can work to keep your dream alive and help keep things thriving after your death. Let’s look at some ways that estate planning helps.
- Protection from Unfamiliar Owners with Buy-Sell Agreements. Frequently partnerships between family members or friends are LLCs. However, one of the owners will die before the other, and if this occurs, things are in jeopardy if a buy-sell agreement isn’t in place. Buy-sell agreements can make certain that family members of the deceased don’t gain control. It also automatically allows other owners to buy the owner’s share in the company.
- Implementation of a Succession Plan. A succession plan can identify and develop new leaders and key people to fill business objectives. Succession plans are implemented long before an owner’s death, so their wishes can be upheld. A succession plan can also decrease the chance of family arguments that come after a person’s death.
- Elimination of Unnecessary Taxes. A business that’s operational and successful will have assets and significant tax burdens for heirs. You can do one of the following:
- Gift family members shares or membership interest, while they’re still alive
- Redeem stocks at a lower tax rate than cash; or
- Estate taxes can pay estate taxes in installments.
- Heirs may not be able to pay the 35% – 50% estate tax on the business.
To help you with your business succession planning, contact an experienced estate planning attorney to make certain that your family is financially sound after your death and that your legacy continues on with your family business.
Reference: Legal Scoops (July 14, 2020) “3 Ways Estate Planning is Used in Small Business”
Suggested Key Terms: Estate Planning Lawyer, Inheritance, Asset Protection, Probate Attorney, Estate Tax, Gift Tax, Business Succession Planning, Retirement Planning, Tax Planning, Financial Planning