Estate planning, as a process, offers a wide range of flexible tools that you can use to plan for your personalized needs. For example, if you own a business, you can use your estate plan to specify what will happen to your business should you become incapacitated or pass away. This minimizes the amount of work and tough decisions for your beneficiaries, and may even help you keep your business out of probate. Consider these tools as you plan.
- Living Trust
A living trust is an essential tool for many business owners. It acts as a separate entity that owns your business and lets you decide what you want to happen to your business after you pass. In some ways, it is similar to a Will; however, it offers several benefits that Wills do not. With a trust, you can make the plan and agreement with your lawyer privately, allow your family to avoid probate, and minimize legal expenses and estate taxes. The trust transfers your assets upon your death, giving your family access to your business and other assets promptly. This is crucial if they need to take over day-to-day operations, vendor payments, and other business tasks. The trust can even provide for the management of the business during incapacitation, which will also require coordinated drafting of your business documents.
- Buy-Sell Agreements
If your business has multiple owners or you have multiple beneficiaries, you can incorporate buy-sell agreements into your estate plan. This agreement ensures that, should you pass, remaining owners or the company can buy your shares of the business. If you have multiple beneficiaries, a buy-sell agreement permits beneficiaries interested in business ownership to take ownership of your shares, while still allowing those who do not want to run the business to get bought out by the other heirs.
- Life Insurance
Liquid assets are crucial for a business owner’s estate plan, particularly if a buy-sell agreement requires a trust or estate to buy out one or more beneficiaries. A life insurance plan can both provide financial security to your family and provide funds that buy out beneficiaries without leaving the business broke.
- Succession Plan
A well-written succession plan is priceless to beneficiaries. It outlines the running of your business and helps your heirs transition smoothly into business ownership. It also provides options and guidance should your beneficiaries choose to sell the business. The transition period after an owner’s death can be extremely rocky, and without a succession plan, your business could lose valuable clients, get behind on bills, or lose important relationships.
Your estate plan can protect your personal assets while preserving the business you’ve built. Find out how we can help you reach your estate planning goals—call the Law Offices of Tyler Q. Dahl at 916-545-2790.
Dahl Law Group
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