Estate planning gives you the opportunity to determine what will happen to your assets when you die. While only 34% of Americans have made an estate plan, you can use these documents to make sure that your business continues to be steered in the right direction after your death. With this plan in place, you’ll also be protecting your employees and customers.
Setting Up Business Succession
Estate planning is highly important to business owners who want to have a say in what happens to their venture after they pass away. Depending on how your company is set up, it’s possible to control how your business is handled in the months and years following your death, which is an effective way to ensure that the business survives. There are many issues that business owners can consider when creating an estate plan, which include everything from tax planning to asset protection.
When creating an estate plan, it’s possible to determine how the business succession will take place. If someone owns and manages their own business, it may need to be transferred to someone else once they retire or die. In this situation, the business owner can identify potential successors and prepare them for the transfer of their business.
This process also involves developing a detailed succession plan, setting the ownership transfer process, and addressing problems that might arise when it comes to leadership transition. If these issues are taken care of ahead of time, the successors won’t need to be bogged down with them in the immediate aftermath of your death.
Make sure that you know who will oversee your company, what the ownership structure will look like, and how your company will be valued. It’s possible to structure ownership in a manner that reduces taxes. If there’s a chance that there will be disputes among your beneficiaries, estate plans allow for these issues to be addressed.
Minimizing Taxes and Protecting Assets
Estate planning for business owners also involves tax planning. This can involve everything from reducing capital gains taxes when business assets are transferred to lowering estate taxes. There are many different strategies that can be used when attempting to mitigate taxes, such as gifting shares and setting up trusts. Many business owners attempt to preserve wealth by minimizing the amount of taxes that their beneficiaries will need to pay after they receive the decedent’s assets.
Owners often take on certain liabilities when engaging in business activities, which is something that estate planning can help with. The estate planning process may involve strategies for protecting business assets from lawsuits and possible creditors. There are also numerous measures that can be taken to keep these assets from being obtained if there’s an issue with personal liability.
Handling Buy-sell Agreements
When an owner has a co-owner or partner, buy-sell agreements are commonly used to set certain terms and conditions pertaining to the business and how ownership interests will be transferred. For instance, these agreements can include details about how an ownership interest will be sold if the person retires or dies. The purpose of this type of agreement is to ensure a smooth transition from one owner to another. It can also prevent disputes and ensure that the business receives a proper valuation.
Valuation for Your Business Assets
During the estate planning process, business assets are required to be valued, which is necessary when identifying possible estate tax liabilities. It can also help when making sure that heirs receive the same portion of assets. There are several different business valuation methods that can be used, which include estimating future earnings potential and identifying the company’s fair market value. If you need help with any aspect of this process, call our New Jersey estate planning lawyer to have further discussions about estate planning.
Create Business Continuity Plan
Just like ownership transfer, business continuity is an important aspect of the estate planning process. If the business is currently a success, more people than the owner should know how to maintain this success for years to come. Estate planning can involve developing a business continuity plan that includes details about who will make decisions and who will manage the staff. By creating an effective business continuity plan, the business should continue to provide financial security for stakeholders as well as the decedent’s family members.
Professional assistance can make it easier to create an estate plan for your Paramus business. Call our New Jersey estate planning lawyer today at (201) 996-1200 to schedule a consultation.