Estate Planning Gets Complicated For Business Owners

BY: Daniel M. Savage


An important gift to your family and yourself is to create thoughtful order in your financial life, and that includes providing for the proper care and administration of your estate…during your lifetime and upon your death.  The ultimate benefit is peace of mind.

Common estate planning goals include the following:

  • Caring and providing for loved ones,
  • Caring for and transferring your assets to the greatest extent possible,
  • Passing on your values, beliefs, and legacy to loved ones,
  • Avoiding probate and intestacy,
  • Planning for a possible disability,
  • Minimizing taxes of all types…during life and upon death, and
  • Maintaining privacy to the extent possible.
Business ownership magnifies the importance and complicates the attainment of these goals, most of which are interrelated.  

Let’s examine four reasons why this is true.

1) A business is often the owner’s largest investment. In fact, it’s usually the largest investment by far; therefore, any decision or development, good or bad, has the potential to create an outsize impact on the owner, loved ones, and employees.

2) Your disability or death may threaten the viability of your business and/or the likelihood of realizing its full and fair value should a sale be sought. Ask yourself these questions:

  • Who will control and manage your business in the event of your disability or death?
  • How will your loss have an impact on sales and profitability?
  • How will it impact loan agreements and other contractual relationships?
  • Will you be able to retain key employees?
  • Who will assume your role, and how will he or she be compensated?
  • You can address these issues by establishing carefully designed Business Continuation and Succession Plans.  Both are necessary.
3) In addition to being an owner’s largest investment, a business is usually the primary source of support for the owner and his/her family. That’s a critical consideration that should be fully addressed in a formal Business Continuation plan.

4) Individuals beyond your family are depending on you. In addition to spouses, children, other descendants, and possibly parents, your business provides a means of support for your employees and their families.  It’s important to look beyond immediate family.

So here are three steps that will help ensure that your financial life is in order. 

First, make sure that your estate plan is current and has been drafted by an estate-planning attorney who specializes in working with business owners. Next, develop Business Continuation and Succession Plans with assistance from your professional advisory team.

Finally, if you aren’t sure of where to start, please feel free to call one of our Wealth Managers, we'd love to help.

"Planning is bringing the future into the present so that you can do something about it now."

- Alan Lakein

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