What Estate Planning Issues Do Business Owners Face?
Business owners must consider unique issues when putting together an estate plan. Thinking through these issues and drafting the right documents, such as a will or trust, can benefit both your family and your business.
Estate planning may lower the taxes your heirs will need to pay and give you some control over how your assets are distributed after your death. Without proper precautions, your ownership interest may go to your next of kin (who you may not want to own your business) and be tied up in probate court, which may seriously interrupt its operation and result in lost customers, revenue and value.
If you co-own the business with at least one other person, you should have a buy-sell agreement (or “buyout agreement” or “business will”) where co-owners spell out when, how and for how much the ownership interest of one party would transfer to another if a partial owner dies, becomes disabled or simply wants to leave the business.
Make sure the documents creating the business entity are up to date and accurate. Many business owners will have partnership or incorporation documents created when the business starts, then fail to update them or make the necessary, ongoing filings. If this is true in your case, outdated documents can complicate transferring ownership.
If you are the sole proprietor, that can have tax implications for your heirs, so you may want to consider making a change to a different form of business (such as a corporation).
• If you are the sole proprietor, your company’s assets are owned by you as far as determining if any federal estate tax is due.
• If your business has significant assets (real estate, heavy equipment or intellectual property), your heirs may get a hefty tax bill and quickly need to sell assets to pay it.
There are also some practical problems when a business owner passes away without planning ahead:
• Does anyone else have keys or codes allowing access to your business?
• Are computer passwords written down in an accessible place?
• Is anyone other than you authorized to write checks for the business or enter into contracts on your company’s behalf?
• Is there a list of contact information for key people, managers, accountants, lawyers?
• Are contracts binding your company in one, accessible place?
These concerns may seem daunting, but we are here to help. The Stone Law Offices has extensive experience in helping clients address both business law and estate planning issues. We can help you put together plans so both your family and your business will benefit. To discuss your plans and needs, call the Las Vegas, Nevada business succession planning attorney Craig Stone today at (877) 905-0890.