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Estate planning is a vast topic and covers a lot of ground. For entrepreneurs and small business owners, it can get complicated.
Here's one reason why: A family's wealth can often be tied up in the business venture. That becomes the one major source of income for the family.
Entrepreneurs and small business owners can benefit from estate planning and can use estate planning tools to their advantage. Here are three things you need to think about:
A business needs to have a proper succession plan and a plan to transition ownership.
This might be accomplished in your will, or by setting up a family limited partnership. This is very common among small business owners, and is often used in business succession planning among family members.
Business buy-sell agreements can also help the successors of the business deal with other shareholders in the event that the primary shareholder in a business passes away.
In many cases, insurance can help the business in the event that a key person is disabled or passes away. Two types of insurance that can be helpful include life insurance and key person insurance.
Small businesses can benefit from certain tax breaks. One of these include the tax deferral on the estate tax, under Tax Code Section 6166.
There's also Tax Code Section 303, which allows a tax break on the redemption of certain stock by the estate of a deceased. A good tax attorney can help outline these provisions in an estate plan and help with the proper administration of an estate to take advantage of these tax breaks.
For more general estate-planning tips, check out FindLaw's free Guide to Estate Planning, which you can download and share with family and friends.
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Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.