For business owners and those in private practice, estate planning can become highly complex. Not only must you determine how and to whom your financial holdings will be disbursed, but you must also plan for the succession or sale of your business.
This process requires careful planning that starts well in advance of when you may anticipate you will need it. And because you have no way of knowing what the future holds, most tax and
estate-planning lawyers suggest you begin the process now.
Estate-Planning Considerations for Sole-Practitioner Service Providers
Individuals in private practice, including CPAs, physicians, attorneys and other service providers, may not wish for their business to continue once they die or become unable to work. The first step in establishing a comprehensive estate plan is to determine what you want the disposition of your business to be at that time.
You may prefer that your estate plan provides for the sale of your business or liquidation of its assets, depending on your company structure, rather than transferring ownership to an heir or designee.
The services of a business law attorney are invaluable when establishing plans of this type, to address any potential estate taxes or other financial liabilities. Another potential threat comes in the form of professional liability, for any problems that may be discovered after your passing.
Addressing Complex Estate Planning Issues of Owner-Dependent Businesses
Many owners of closely held businesses maintain control of virtually every aspect of the operation. If you make every important decision and carry the fundamental knowledge of your business model around in your head, this can create significant problems in the estate-planning process.
If you want your business to carry on after your passing or incapacitation, you must begin planning for that event well in advance. In fact, if your company is owner-dependent, you may need as long as a decade (or more, in some cases) to effectively plan for succession.
Complex Estate-Planning Strategies
The minimum elements every business owner needs are a will, appropriate insurance coverage, a company succession plan, disability provisions and a comprehensive asset-protection and wealth-transfer plan.
Because this topic is difficult for many people to face, a substantial number of business owners and professional practitioners have never addressed the issue of planning their estate’s future. Even if discussing your mortality is uncomfortable for you, consider the challenges your family would face under those circumstances. Taxes and probate fees can quickly erode your accumulated wealth and leave your heirs without the resources they need for the future.
Even if you previously established an estate plan, having it reviewed regularly — and updating as often as needed — is a priority you cannot safely ignore. Tax and asset-transfer laws change regularly and can profoundly affect your estate.
The Salt Lake City business attorneys at Franchise & Business Law Group specialize in helping business owners with complex estate-planning and business-succession planning. Contact us today to schedule a consultation.