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Put
Your Estate in Order
 For
business owners, an effective estate plan addresses a number of concerns over
and above the desire to care for surviving family members. Control over who will
run the business, conservation of the owner's assets in the face of legal
expenses and taxes, and the liquidity to pay estate taxes due shortly after
death are just some of the most pressing issues.
For the sake of their heirs, business owners should plan for the orderly
transfer of their wealth — including their business interests — well in
advance.
Prepare for Estate Taxes
Depending on the value of business and personal assets at the
time of death, the law may require that estate taxes be paid on the value of the
business. If there is not enough cash on hand, heirs may have no choice but to
sell the business prematurely or for less than the real value.
Some business owners use an irrevocable life insurance trust to purchase
policies on their life, collect any death benefits, and distribute the money
according to prearranged terms. The proceeds can be used to pay any estate taxes
due, so heirs are not forced to sell a business, property, or other assets they
would prefer to keep in the family. The use of these approaches can involve a
complex web of tax rules and regulations. You should consider the counsel of an
experienced estate planning professional before implementing such strategies.
 Plan
for Successful Succession
A buy-sell agreement may be forged between the owners or shareholders of a
business, outlining the terms for a buyout in the event of death or disability.
It usually includes a pre-negotiated sale price, but can also explicitly request
individuals to sell their interests to others or indicate who should manage the
business operations.
Payments from a life insurance trust may also be used to buy assets from an
estate, such as transferring ownership of a family business according to a
pre-existing buy-sell agreement.
Your business is not just your livelihood. It's likely to be the largest portion
of your estate and thus the core of the legacy and security you intend to leave
behind for your family. A solid estate plan can help keep your business intact
through the most difficult transition of all.
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