Estate Planning for Small Business Owners
If you are a small business owner, it is important to plan what will happen to your business after you pass away. If you do not clearly define what will happen to your business after you die, the value of your business can potentially decrease because of the cost of attorneys and accountants that will need to get involved to work things out. Additionally, unplanned business transfers can easily lead to ownership and management disputes that will cripple your company’s ability to operate.
The successful transfer of your business to the next generation or another party relies on careful planning. Read on to learn more about things you will want to consider as you prepare for the future of your business.
As a small business owner, you might want to keep the business in the family. To achieve this goal, you must consider estate, tax and family issues when making a plan for the succession of your company’s ownership and management. If you want to preserve your business and pass it on to your heirs, the transfer of the business assets and the transfer of management must be carefully planned and considered.
The transfer of management of your family business can take place gradually depending on the needs of the business and the wishes of the family members involved. As your successor gains credibility and confidence in the daily operations of the business, you can transition to an advisory role. It is a good idea to create a transition timetable in order to assure management continuity. Re-evaluate your transition plan periodically to ensure your goals are being achieved. Careful planning and good communication will allow the transfer of power to your successor to happen smoothly.
Once you have decided who will control the management of your business, you must determine how and to whom you want to transfer the wealth of your business. You may decide that it will be transferred to the same person who assumes management power of the business or it might be a different person or group of people. In order to accomplish the successful transfer of your business assets without being crippled by tax consequences, work closely with a trusted estate planning attorney. Proper planning with your attorney will prevent your family business from being financially destroyed by estate tax and force liquidation of the business assets to pay off the debt.
Creating a plan for the transfer of your business to your heirs is just as important as writing your Will. Communicate with your estate planning attorney, make the required decisions and put a plan into action.
For an assessment or to learn more about how to protect the value of your small business for your family, contact the trusted attorneys at Fingeret Law today. Please call us at 412.281.8222 or contact us online.