If you’re a small business owner you undoubtedly spend countless hours juggling bills and balancing your books, not to mention all those extra hours you spend worrying about the future of the little business venture that you consider “your baby”.
In fact, you’ve been so busy that you’ve probably avoided planning your estate. Understandably, no one likes to look down the path of their life to the day they won’t be there for their families or to run their business. And estate planning – especially when a business is involved – is seldom simple, but there are some things you can do right now to protect your family and your business. Here are some important estate planning questions every small business owner needs to ask during a consultation with an attorney:
I have created a last Will and Testament – can you go over it with me to make sure it’s correct?
If you have an existing Will, bring it with you to your meeting. While it is possible that your existing Will may not need to be changed, it is more likely that your Will needs to be updated or replaced with other planning because of changes in the law, changes to your family, or changes to your business since the last time you reviewed your estate planning documents.
Do I need to bring in my company documents?
The most valuable asset you own is likely your business, and planning for your business goes hand-in-hand with planning your estate. You should be ready to provide copies of your company’s Bylaws or Operating Agreement, as well as providing an overall picture of the financial health of your company.
Do I need a buy-sell agreement for my business?
Do you want to go into business with your business partner’s spouse or children? If not, consider having a buy-sell agreement among the owners of your business. A buy-sell agreement, if structured properly, will have a structure for your partner’s ownership interest to be purchased at a predetermined price upon disability and/or death. Doing so will now will prevent a lot of potential heartache later.
Do I have a taxable estate?
The vast majority of Americans have no concern with the federal estate tax. However, the Estate Tax is a hot issue in Congress and is always subject to change. With a simple act of Congress, the estate tax exemption could be drastically reduced or eliminated altogether. That means it is important to have a picture of the full value of your estate – including the value of your business – so that proper measures can be put in place in the event you do have a taxable estate. Even if your estate is comfortably within the exemption today, proper planning can create flexibility for your trustee or executor to manage assets so that it reduces or eliminates your estate’s tax burden.
What should I set up for my kids? They’re under 18 right now and if I die unexpectedly, what can I do to make sure they’re covered?
You can set up any number of trusts to protect what you want your kids to get when you die. If your kids are grown but you have grandchildren to think about, you can also choose a generation-skipping trust to protect what you want them to receive. There are many trust options here, so make sure you provision one well – you don’t want a 19-year-old rolling around town with the bankroll you spent your whole life building. Think of options like having them receive a monthly stipend until they reach a certain age, or only giving them the remainder of their trust if they finish college.
Disclaimer: This article is for informational purposes only and not intended as legal advice or to create an attorney-client relationship. Every situation is unique and consultation with an attorney is required before any specific advice can be given.