Starting a business is an exciting time in life. A lot of blood, sweat, and tears are invested in making the business a success and creating a legacy. But what happens in the unfortunate instance of your death or incapacitation? Estate planning for small business owners is an essential part of keeping your legacy alive.
According to a survey of small businesses, an estimated 72% of small businesses don’t have a succession plan. Estate planning for small business owners is essential if you want an effective succession plan, ensuring continued operation and minimization of estate transfer taxes.
What Is Estate Planning for Small Businesses?
Small business estate planning makes provisions for personal and business assets.
Consider that the business assets belonging to a sole proprietorship are essentially the same as personal assets. Depending on the setup of the business, estate planning strategies can take various forms.
- A will – allows business owners to name an individual to receive business assets in the instance of death.
- Living trust – naming an individual to receive business assets and bypass probate in the instance of death.
- Succession plan – a strategy for passing on leadership roles.
- Buy-sell agreement – an important strategy when there is more than one owner and requires ownership interest to be purchased by the business in triggering circumstances.
A qualified and experienced legal professional will be able to offer advice as to how to structure a plan to suit your business.
Benefits of Estate Planning for Small Businesses
Creating an estate plan isn’t always on the top of the agenda for small business owners, but it should be. There are several benefits of proper business estate planning, with two that stand out above the rest.
- An estate plan ensures that the business continues to operate in the instance of incapacity or death. Usually, this involves the transfer of managerial roles, assets, or ownership.
- For some estate, proper estate planning minimizes estate transfer taxes, reducing the financial burden on beneficiaries.
Business owners spend years investing time and resources in the business. Estate planning can allow the business to continue to grow in a seamless way once the owner passes away.
Estate Planning Tips for Small Businesses
There are a few considerations when drafting a business estate plan. Here are a few estate planning tips to keep in mind.
Benefit From an Experienced Florida Estate Planning Attorney
It’s essential to contact an estate planning attorney who is experienced in preparing and implementing estate plans for business owners. An attorney can offer guidance on the estate planning method, and serve as a legal representative when required.
Determine Your Business Goals
Take the time to consider what direction you want your business to take. The future plan of business growth will determine the estate planning strategy and how the asset will be managed after death.
Remember Life Insurance
Buying out shares or distributing assets becomes significantly more complicated if the business is deep in debt. Life insurance can provide the capital needed to keep the business running and benefit those involved.
Estate Planning Attorney in Florida You Can Trust
Are you a business owner and ready to put a succession plan in place? Contact Cipparone & Cipparone today and find out more about estate planning and corporate law services. Owning a small business is an opportunity to create your legacy, and we’re here to assist.
**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.Tags: Estate planning, small businesses, succession planning