Even though owning a small business may keep you busy, you should still make an estate plan. Lack of a strategy could lead to issues for your family and business after your passing.
While everyone should have an estate plan, small business owners need one more than others. Planning gives you the power to decide what will happen to your company if you pass away or become unable to run it. By using it, you can avoid paying too much in taxes and debt and ensure your business prospers.
You should consider your objectives for the company before starting the estate planning process. What do you want to happen in the event that you pass away or become incapable? Should the company be sold to new owners, or should the current partners keep running it? Does your family need to take over? Should the company close its doors? When pondering these questions, take your family’s dynamics into account. Once you’ve established your objectives, you may come up with a strategy to achieve them.
Get sound legal advice from a qualified Cherry Hill NJ estate planning lawyer and determine your best course of action.
Estate planning tips you should consider
A will, a power of attorney, and medical directives are the fundamental components of any estate plan. While the power of attorney and medical directives specify who can make financial and medical decisions on your behalf, the will allows you to choose who will inherit your property after you pass away.
The other factors listed below are items a small business owner should think about as part of an estate plan:
Preparing taxes. You might wish to think about estate tax minimisation strategies if your company is not a separate legal entity. Most estates do not pay any inheritance tax because of the large current exemption ($12.06 million in 2022). A tiny business, however, might exceed the threshold for an estate.
Trust. In addition to helping you save money on estate taxes, trusts can help you protect your company’s future in the event of your passing or incapacitation
Purchase-Sale Agreement. A buy-sell agreement is particularly beneficial if you own your company with others. If an owner passes away, quits their job, or becomes incapable, buy-sell agreements are used.
Life insurance becomes even more crucial if you own a business. In the event of your passing, a life insurance policy can guarantee your family’s financial security.