For many individuals in Minnesota, the benefits of estate planning on personal assets are clear. However, proper planning can be equally important to protect the ongoing longevity of a business. When a business owner passes away, it can be far too easy for a company to fail. This is especially true when the business is a small, closely-held operation.
Business-centered estate planning can help to set a framework in place that will allay such fears. One major focus of a business estate plan is arranging a proper transition of management and authority after a principal’s death. This can include preparing and planning for the next management team before it is time for them to take their roles. By making these preparations, a conscientious owner can be assured that their business will be well cared for.
Another document that can be an important part of business estate planning is a buy-sell agreement. This is important when a business has several owners or partners as it allows the surviving owners to buy out the interest of a deceased partner. This prevents the business itself from passing with other assets to the beneficiaries of the owner’s personal estate. Instead, the proceeds of the sale will enter the estate. Furthermore, a good succession plan can help to limit tax liabilities. Vehicles like a grantor retained annuity trust (GRAT) can pass assets to one’s children while assuring the owner retains their person source of income during their lifetime.
Business estate planning is an important part of securing the future of one’s company. By working through the estate planning process with an attorney, a business owner can set forward a clear vision for their company’s future success.