Estate Planning for Small Businesses
The challenges that small businesses have to face are unending. Right from hiring staff to marketing to managing customers, it all requires great attention. Unlike big organizations, customers just don’t line up because the visibility of small businesses is often less. Taking care of both the present and future responsibilities is an important task. Incorporating an estate plan does exactly this.
An estate plan helps handle the business efficiently in cases where the owner dies or becomes unable to run the business for some reason.
The Need for Estate Planning
There has to be a plan in place when the owner is no more because somebody has to take the business forward. An estate plan has proper clauses written into it that looks into all such issues and offers solid solutions.
Estate transfer taxes can be a big liability to small businesses when facing an unexpected situation. This tax is levied on the transfer of property following death and applies to all the assets including financial. A good plan manages this as well.
Steps of Estate Planning
- Basic Estate Plan
A basic estate plan requires a will that details your wishes on how your assets must be managed. Two other essential documents are power of attorney, which authorizes another individual to take over, and a healthcare directive, which authorizes another individual to make medical decisions.
- Plans On Taxes
Good estate planning provides ways to lessen the estate taxes to be paid. You can get expert advice on how to make the transition of the business to another hand smoother.
- Look Into The Issues Around Family Businesses
There may be many issues surrounding family-owned businesses if the descendants of the owner have different minds. A financial advisor can be a guide to help resolve issues in a way that is fair to all the siblings.
- Buy-Sell Agreement
This step is applicable if your small business has more than one owner. A buy-sell agreement states who will buy the shares of the deceased owner, the price and decides on other important aspects too.
- Life and Disability Insurance
Life insurance is inevitable for small businesses as it ensures that your family has a source of income even after your death. Similarly, disability insurance provides a steady flow of money if you become disabled.
- Succession Plan
This plan has details about the business and its competitors. Creating a succession plan is vital as it describes how the business and family will get ready for a change in ownership. It is also useful in cases where it is decided to sell the business.
- Update The Estate Plan
After the estate plan is drafted, make sure that it is updated regularly. This is necessary because the laws change very often and they have a considerable impact on the industry.
Businesses whether big or small demand a lot of hard work and effort. So, if you don’t have an estate plan currently, it is time to think of one.
Contact an Experienced Estate Planning Attorney Today
To get support and guidance on estate planning, contact Tampa estate planning attorney David Toback today to schedule a consultation.