Why is it important for small business owners to have an estate plan?
Creating a comprehensive estate plan is one of the most important steps that you as a business owner can take to safeguard your assets and protect your loved ones. Without an estate plan in place, your loved ones and your business may flounder if you died unexpectedly. Your heirs could even be forced to enact a quick sale of your business to satisfy probate related tax obligations. Our Tampa estate planning lawyers discuss some estate planning tools that all small business owners should utilize.
Last Will and Testament
Perhaps the most basic and fundamental estate planning tool you should have as a small business owner is a will. With your properly executed will, you can provide clear instructions to your executor as to how you want your assets managed or distributed after your death. Without a will in place, the court will likely be forced to sell your business at whatever price it can and then distribute the assets to your closest living heirs.
A revocable trust can offer business owners protections that a will alone simply cannot. With a revocable trust, ownership of your business can be transferred to the trust. Upon your death, the business will not need to go through probate. The appointed trustee will take over management of the business and any other assets held within the trust. In addition to avoiding the time delays of probate, a trust will also save your estate significantly in taxes. Further, the trust can protect your assets from creditors of the beneficiaries.
A buy-sell agreement consists of a contract between the business partners or shareholders which sets out a plan for the business in case one of the owners dies. Your buy-sell agreement will establish a sale price for the business and your individual share of the business. You can decide in the agreement whether you would want the partners to buy out your shares or if you would like your heirs to sell your portion.
All of these estate planning tools will provide crucial guidance for your loved ones when you die. Creating an estate plan should be seen as a critical component to any small business. Contact an estate planning attorney to get started with your bulletproof estate plan today.