Creating a business presents many challenges. While you are likely worried about day-to-day financial issues including printing payroll and collecting on unpaid debts, there are several other critical factors that you should consider like estate planning.
If your business is part of your estate plan, you should focus on how to best protect the business’s legacy as well as how to make sure that your family and loved ones are financially secure.
Without adequate estate planning, there is no guarantee that you wishes will be carried out. To make sure that your goals are fully achieved, it can be helpful to retain the services of a knowledgeable estate planning lawyer.
Make Sure You Cover the Basics
Regardless of the size of your business, it is important to have several critical estate planning documents, which include:
- A healthcare power of attorney to appoint an individual to make healthcare decisions for you in case you become incapacitated
- A financial power of attorney to appoint someone to handle your finances in case you are incapacitated
- A will that expresses how your assets should be distributed following your death
Before creating an estate plan for your business, you should make sure that you have created each of these documents and that they accurately reflect your wishes.
Consider Capital Gains Tax
Any business owner who passes on interest in a company must pay capital gains tax. Disposition can occur either when a business owner sells a company or when the business owner passes away. If a business is unable to pay capital gains tax at the time of this transfer, business owners will often be forced to liquidate their assets. By planning, however, this difficulty can be avoided.
Deciding Whether to Sell or Transfer a Business
One of the most important issues concerning the transfer of a business is deciding how the business will be handled after the owner’s death. Business owners often decide to either transfer a business to a family member or to sell the business. Before deciding which option is best, business owners should speak with both their families as well as any other people who have an interest in the business.
It is often a good idea for the business owner to obtain a security interest in the business in case a family member who receives the business encounters unforeseen challenges like divorce or serious illness. If a business owner decides to transfer a company as a gift, it should be stated that any amount outstanding on a promissory note is discharged at the time of the creator’s death.
Contact a Seasoned Estate Planning Lawyer Today
One of the best parts of hiring an estate planning lawyer is that it makes the process goes much quicker and frees you up to do other things like running a successful business.
If you need the assistance of an experienced estate planning attorney, do not hesitate to contact Jim A Lyon today.