When running a small business, you might be too consumed with the week ahead to prepare for the distant future. However, estate planning can never be done too early. This legal process allows you to bequeath business assets to the desired person if the unexpected arises. Here’s what to consider.
What Small Business Owners Should Know About Estate Planning
Why do I need a will?
If you don’t clearly designate which beneficiaries your assets should go to, conflicts among your friends, colleagues, and loved ones may arise. In the end, the court will get the final say about who deserves what.
Ultimately, their decision might not align with your wishes. By drafting a will, you can ensure that all those years of planning and hard work that went into your small business pay off.
What if I have partners?
If you went into business with one or more trusted colleagues, create a buy-sell agreement as part of the estate plan. This contract will establish the next steps should you pass away or become incapacitated.
Essentially, you can choose whether your partners must buy out your share of the company or sell it to another party. You can also declare who, if anyone, should be barred from taking your place.
Who will take care of my unfinished business?
If you pass away unexpectedly, you may still have bills to pay, debts to fulfill, and other financial to-dos left undone. Choose a financial power of attorney when setting up the estate plan. This individual will be in charge of completing payroll, paying back lenders, and managing other fiduciary aspects of the estate.
Do I need to plan for business taxes?
Estate planning allows small business owners to minimize their posthumous tax bill. When you die, the IRS will expect you to pay a death tax, or 35 to 50% of your business’ value, within nine months. An estate planning lawyer can walk you through the relevant tax breaks, Section 303 and Section 6166, which will help your heirs redeem your stocks and spread the estate tax payments out over 10 years.
Estate planning is a complicated process, and Ronald D. Zipp, Attorney at Law, in New Braunfels, TX, is happy to help. This lawyer has experience serving in the army and as a judge, and he’s proud to be an active member of the local community. He helps individuals and small business owners plan for the future, whether they’re working through a divorce or drafting an estate plan. To learn more about his practice areas, visit the website. Call (830) 629-5600 to schedule a consultation.