Regardless of the income your business generates, your age, or the number of employees, a business estate plan can help. One thing business owners need to know is a business estate plan can help ensure your business remains intact if something happens to you.
Business owners need to know that business estate planning is something that every business owner should consider with the help of professionals. Businesses generally are illiquid, which can create problems for heirs or business partners if the business transfers to probate. When a business owner dies, liquidation must occur, which can be difficult without an estate plan. Here is why you should consider an estate plan:
According to state laws, the business assets will transfer in probate if a business owner dies without a will or an estate plan. The transfer may result in tax consequences depending on the estate’s value. Once the transfer occurs, the business becomes part of the deceased’s estate. Here are other things that may result from not having a business estate plan:
A will and life insurance are excellent places to start depending on your financial situation and the business’s financial condition. But for more complex business situations, a business estate plan should include a will, life insurance, disability insurance, a business succession plan, a trust, and more!
Business owners need to know that creating a business estate plan should involve your legal, tax, insurance, and financial professionals. This team can help ensure the transition of your business goes as you intend. Here is what your professional team may recommend, depending on your situation:
Life insurance provides a death benefit for purchasing your share of the business by other partners to compensate your heirs. Life insurance can satisfy business liabilities or offer financial resources to keep the company intact as it transitions from your ownership to someone else.
Disability insurance provides a monthly benefit to the owner based on a percentage of their monthly income.
A succession plan is a document that describes how the business will transition to partners or family members or sells to new owners. The plan also outlines the operations and management structure during the transition period after the owner dies.
This legal document provides directives for your assets and names either a legal entity or person as the Trustee. This document helps ensure that regardless of what happens to you, the business and assets are protected and end up with whom you intended.
This individual will handle your business’s finances if you’re unable and may help manage personal finances. They oversee the transition of your business as your estate plan dictates.
As a financial professional that works with many business owners, I can help you prepare your business to continue or liquidate, depending on your wishes, to help ensure your assets pass quickly to your heirs. Contact my office for an initial conversation about your business so we can determine the next steps for developing your business estate plan.
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In conclusion, we at Retire Well Dallas have a simple goal: To make your retirement the best years of your life. Time and finances can slip away almost invisibly. We have seen it happen all too often, too unnecessarily. We understand how important time and financial security are in our own lives, so we care about every client that walks through our doors. Contact us today to schedule an appointment.