Estate Planning Tips for Business Owners
Tip # 1
Create a will.
No matter what type of business you own, having a will created is a good idea. Even if you already have a will, make sure it's updated. A will allows you leave directions regarding who you want to leave your business to. When there is no will to refer to, your business is passed down to whoever the state law guides it to. If you don't have a will, then your business will typically go to close family members.
Tip # 2
Consider your taxes.
Many people don’t realize, but estate taxes can be as much as 50 percent or more of the value of the business. Further, once a business owner passes away, the tax burden may need to be remedied soon after the individual passing. However, there are certain tax breaks you can take advantage of as a business owner, so do everything you can to minimize your taxes. For more information on taxes for business, see the IRS website, https://www.irs.gov/businesses.
Tip # 3
Make a succession plan.
A succession plan is basically a road map for your successor to follow when taking over the business. In addition to when a business owner passes away, succession plans come in handy when an owner retires or becomes incapacitated. A good succession plan should have the following:
• Name your successor (this should be done at least 15 years before retiring)
• A detailed training plan
• When and how your successor will be taking control
If you have an efficient succession plan, then passing control to your successor should be seamless. An estate planning attorney in Camden County can help when creating this.
Tip # 4
If you don't have life insurance already, check into it.
It is very common for business owners to take out life insurance policies on themselves and make their partners beneficiaries. This can make it easier for the partner to buy out the owners shares when they pass away.
Tip # 5
Get your business's records in order.
Organize, organize, organize. We can’t say it enough. Be sure to keep the important records of your business organized, so that they are easy to access in the event of your passing. Important records can include insurance policies, your business plan, financial statements, and anything else you might find beneficial in the continuation of your business.
For many people, it may be unpleasant to think of what will happen after they die or if they become mentally or physically incapacitated. For this reason, they may find it easy to put more immediate concerns ahead of estate planning. There can be negative consequences to not having a valid estate plan. Your estate or business may be subject to higher taxes. Disputes may arise among heirs. Property becomes subject to division based on the interstate laws of the state of Missouri, not the wishes of the decedent. To get your estate plan in order, call Phillips, McElyea, Carpenter, & Welch at 573-346-7231 for a free consultation.
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