Statistics about wills and trusts are often bandied about. There have been many reports pointing toward the fact that people are often unconcerned about writing a will. Life insurance is another part of end-of-life planning that is often neglected too.
Typically, it isn’t until people get older or have dependents that end-of-life planning becomes more urgent.
While it requires some sense of pragmatism, estate planning is necessary to ensure that loved ones are looked after once you pass away.
However, for business owners there is perhaps a higher level of importance with end-of-life planning.
Having a last will and testament in place is not nearly enough. Comprehensive estate planning is a must if you are a business owner.
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What Exactly Is Estate Planning, And What Is Involved?
The attorneys at Two Spruce Law P.C. in Bend Oregon were asked to explain estate planning and what it involves.
There are a number of areas and aspects to estate planning, and legal assistance is usually necessary. Especially where complex assets are involved
Estate planning includes the following areas:
- Wills
- Trusts
- Charitable legacies
- Beneficiaries
- Power of attorney
- Business succession
Other parts of estate planning involve proxies and custodians. Healthcare planning can be included also.
Estate planning may include healthcare directives that allow you to make certain preferences known regarding medical treatments should you become incapacitated.
Estate planning itself is a way to arrange all financial affairs and put in place directives for assets to be distributed. It’s simply a process to ensure your wishes will be met once you pass on.
Without estate planning, you will have no control over where your assets are distributed, or how your legacy may unfold.
Estate planning allows charitable trusts to be established also. You may wish for your estate to provide to particular charitable organizations after your death.
Wills And Trusts Are A Basic Part Of Estate Planning
Drawing up a will helps to ensure your belongings and assets are passed on to your chosen beneficiaries. This can ensure you continue to provide for dependents even after death.
A will allows room for appointing guardians and even funeral plans. Trusts are a little different.
With a trust, you will appoint a trusted individual to manage your assets in the event you are incapacitated through illness or die.
Then there is your business to consider. You will need a business valuation for assets to determine the value of your company. Then, business succession plans must be put into place.
This is just one way that estate planning helps business owners.
Why Should Business Owners Be Concerned About Estate Planning?
Many people need only to put in place a simple will. Simple estates without complex financial matters are easy to divide up and pass on to loved ones. Yet, business owners will have far more complicated estates.
Consider your own business. Do you own it outright or is ownership shared with a partner? What debts are involved in the business? And how will you protect the company if you pass away or become disabled?
Estate planning is needed by business owners to ensure a smooth transition and continued operations after the head of the company passes away. Unfortunately, death sometimes results in conflicts, legal battles, and tax problems.
Business succession in estate planning helps owners to mark out a clear route for transfer to chosen successors. Estate planning attorneys can draw up plans that leave no room for ambiguity or conflict.
A proper business succession plan will smooth out any bumps and enable a company to continue as normal. But, there are other gains for business owners as you can see below.
1. Asset Protection
After you pass away, it is possible that some people may crawl out of the woodwork to stake a claim on your business assets.
Legal asset protection requires estate planning lawyers to ensure the value of a business is safeguarded.
Of course, there are ways to squirrel away assets and hide them from the IRS and creditors.
But, this fraudulent activity will only harm your business in the long run. Estate planning attorneys shield assets lawfully and help to protect them from prowling creditors.
2. Protection From Taxes
There are few things guaranteed in this world. But, as the famous saying goes, taxes are one of them. When assets are transferred to beneficiaries, certain taxes may be applicable.
Gift tax and estate tax will come into play. Through smart estate planning, a strategy can be put into place to reduce tax liability.
3. Dependent’s Financial Security
A major part of estate planning involves choosing which assets to leave to which beneficiaries.
Wills and trusts let individuals provide some financial protection for their partners and dependents. This is equally true for business owners as well as individuals.
To ensure your wishes are met regarding the distribution of your business’s assets, estate planning must be used. This way you will have peace of mind knowing your family will receive their inheritance.
4. Protection For The Key Employees
There are insurance policies available for protecting those vital key employees that businesses couldn’t cope without.
Top salespeople, executives, and anyone who is crucial to the success of a business needs to be protected.
Estate planning will let you put into place some arrangements to compensate and protect vital employees.
5. Contingency Planning
Much of business estate planning is about contingency. Putting into place buy-sell agreements to protect business partners or key employees is just one example.
When you pass away your business could potentially fall apart without a contingency plan.
Drawing up an estate plan creates provisions for those unpredictable moments that life can bring.
People die unexpectedly. Accidents happen. And serious illness can strike without warning.
Contingency plans are part and parcel of setting up a business for success. And the same is true for helping businesses to continue after the owner and figurehead dies.
Putting into place contingency plans means that power of attorney is established before the worst happens.
Individuals that you trust can be appointed to manage areas of your business and assist with business continuity.
6. Personal And Business Asset Goals
Business owners have personal assets too. This is one reason why estate planning is much more complex for entrepreneurs than it is for regular individuals.
Anyone can draw up a will without the aid of a lawyer. Indeed, there are websites where legal documents for wills and even divorce can be downloaded. But, estate planning for business owners requires experienced legal help.
Estate planning attorneys will help company owners assess their personal and business objectives for asset distribution.
How your assets are passed on will be clearly laid out in your directives. And this way your wishes will be carried out regardless of whether the assets belong to you or your business.
Summary
Estate planning helps to avoid arguments and conflict after an individual passes away. A properly drawn up will help to avoid probate and more upset for distressed loved ones.
For a business owner, estate planning is necessary for appointing successors and protecting company assets.
With complex financial matters, end-of-life wishes need to be laid out clearly. Instructions and directives must leave no ambiguity or confusion.
Therefore, estate planning lawyers are vital to business owners to help minimize tax liability and protect assets from creditors.
