The Importance of Including Business Succession in Your Estate Plan
Estate planning is always confusing, but it can be especially complex for those who own a business. A business succession plan is an often-overlooked element that can reduce friction between your family members and ensure the company you’ve built lives on. Below are a few things every business owner should know about estate planning.
The Benefits of Having a Business Succession Plan
When a business owner passes away without a succession plan, someone they might not have chosen could be put in charge of their company. This family member or partner may take the business in a direction you wouldn’t have wanted. Even worse, the business might go to someone who has no interest in running it.
A succession plan gives you the power to decide what should happen to your business after you’re gone. For instance, you might decide that a valued employee should take over the company, or give control to a family member. If you have partners, you might stipulate that they have to buy your interest in the business after you pass away.
What a Succession Plan Should Include
A will is the only way to transfer your interest in the business to someone else. However, to transfer management responsibilities and duties, you may need to prepare documents that outline who takes on your role after you’re gone. This may be a different person from those to whom you left your ownership stake in the company.
If you have partners, you may also include a buy-sell agreement that guarantees your loved ones will be fairly compensated for your share in the business. This minimizes conflict and ensures your spouse and children don’t have to participate in operating a business venture they don’t want.
How to Minimize Estate Taxes
If the total value of your estate, including business assets, exceeds $12,060,000, your heirs may have to pay estate tax. Local governments may also have additional estate and inheritance taxes, which could cost tens of thousands of dollars.
Family trusts allow you to transfer some of your business assets and interests to your children without excessive taxation. Not only do these vehicles reduce the taxable value of your estate, they also bypass probate. This helps make transferring ownership as quick as possible, minimizing interruptions that could force your business to close.
Since 1893, The Law Offices of Bromm, Lindahl, Freeman-Caddy & Lausterer has provided detailed legal advice to business owners throughout Wahoo, NE. Their team of attorneys consistently provides a level of service that has earned an AV® Preeminent™ rating from Martindale-Hubbell, the highest rating that a law firm can achieve. Visit their website for more on their estate planning services, and call (402) 443-3225 to consult with an attorney today.