Planning for your death or incapacitation may not be the most appealing task on your to-do list; however, it is very important to make time to work with a Texas estate planning lawyer, especially if you own a business and are looking to get tips for business owners. Failing to develop an estate plan can create serious problems for your family and your business. Your business is probably one of the biggest assets you own. You need to determine how to protect this asset for your heirs and make it easier for your heirs to step into the role of business owner or sell the business for top dollar after your death.
Below are seven estate planning tips for business owners that can help you develop a comprehensive estate plan.
- Draft a will and other estate documents – It sounds very simple, but drafting and executing a will and other estate documents is essential for business owners. Handling a business after the death of an owner or partner can be difficult. However, if your heirs must deal with business concerns while dealing with the added pressures of an intestate estate, the process of settling your final affairs can be more time-consuming and costly.
- Purchase additional life insurance – Life insurance can provide the liquidity your heirs need to finalize and close the business after your death. If the business continues, a life insurance policy with your successor as beneficiary can help provide operating capital while your successor becomes acclimated with the business operations. In addition, you might want to consider purchasing disability insurance to assist with expenses if you become incapacitated.
- Extend liability insurance – You also may want to consider making arrangements to pay the liability insurance premiums for the business for a certain period after your death. This step can protect your family if a customer or client files a claim or lawsuit against the business after your death.
- Prepare a Business Succession Plan – A Business Succession Plan can ensure the smooth transfer of your business to your heirs or successor. You should coordinate your Business Succession Plan with your estate plan, especially if you want to leave the business to an heir. A plan allows you to prepare your successor and train your successor to reduce the risk of problems and issues when you pass away.
- Focus on minimizing estate and other taxes – If you own a business, your estate plan must include provisions to minimize estate and other taxes. You want to try to avoid the necessity of selling business assets to pay taxes. A Texas estate planning lawyer can help you explore several options for minimizing tax liability for your business and your estate after your death.
- Maintain organized records – Detailed and organized records can make probating an estate easier for your heirs. However, if you own a business, it is crucial that you maintain detailed, organized, and accessible records. Some of the business records that your successor or heir needs access to include your business plan, operating guidelines, financial statements, business tax returns, insurance policies, profit and loss statements, and balance sheet.
- Develop a Buy-Sell Agreement – If your business has multiple owners or partners, a buy-sell agreement can be an extremely beneficial element of your estate plan. With a buy-sell agreement, you can determine if you want the other owners to purchase your interest, bequeath your interest to an heir, sell your interest to a third party, or block certain individuals from stepping into the business.
Estate planning may seem overwhelming; however, working with a Texas estate planning lawyer can make the process less stressful and easier. Schedule a consult with one of our experienced estate planning attorneys today.