How Estate Planning Helps Your Business
If you’re a business owner, you know that building a company takes a tremendous personal investment of time, energy, and brainpower. Building your own business requires long-term vision, operational know-how, and deliberate structuring of everything in between. In the event of an unexpected death, illness, onset of disability, or other life crisis, what will happen to your business? Many business owners become so wrapped up in daily operations and ensuring the profitability and present-day success of their company that they fail to prepare for the worst.
Succession Planning and Preserving Your Long-Term Vision
If you, the company owner, were to die, fall seriously ill, or be rendered disabled without a succession plan, your relatives may become owners by default. With proper succession planning, you not only decide who will take your place—you give yourself and your successor time to prepare, train, and build up the point of leadership transfer. This creates a much smoother transition when the day comes (even if it comes earlier than you plan).
Buying and selling companies is often a tedious, complex, and rather long process. As a company owner, you can draft and finalize a buy-sell agreement for your company leaders to use in the event of your passing, minimizing the strain of the process. This allows you to decide the terms of your company’s sale or dissolution, partially in order to determine how your resulting assets will be divided among those named in your last will and testament.
Preserving Your Assets and Company Longevity
Most founders and owners dream of building something that will outlast them. An unprepared successor or a chaotic rearrangement of leadership in the event of your untimely death or disability can result in the downfall of the company. By doing everything in your power to secure a smooth transition, you help your company remain stable for years to come.
Estate planning also allows you to decide how your assets will be divvied up in the case of your death, including who will receive an inheritance, when they will receive it, and in what form they will receive it. By streamlining the process, clear instructions for succession can ease the difficulty grieving family members experience and prevent company leaders from being at odds with your family over assets, company leadership, etc.
Minimizing the Blow of Estate Taxes
When a business owner dies unexpectedly, their assets and property are often subject to crushing taxes. (Estate taxes are commonly known as “death taxes.”) However, with a proper succession plan in place and an established, grantor-retained annuity trust, you can successfully transfer the assets and earnings from your business (including their continued appreciating value) to your descendants and family members without letting the federal government take a bite out of it.
Get Your Estate Plan Started Today
No company lasts without proper planning, and it’s rare for a smooth transition without a succession or estate plan in place. Even if your company only recently got off the ground, it isn’t too early to begin protecting its long-term success. Get started by reaching out to one of our experienced business attorneys at Scaringi Law today.
Call us at (717) 775-7195 or send us your information to see about receiving a free consultation right away.