Estate Planning for Small Business Owners

January 11, 2012

Updated for 2012

Sudden death or disability of a business owner can cause immediate hardship on your company and your family. Without a business succession and estate plan, your business could lose momentum and profitability while leadership and ownership is debated in probate. You may suffer unnecessary estate tax liability. If your family lacks resources to make ends meet during or after the probate process, they may be forced to sell company assets or sell a company in its entirety from a disadvantaged position. A well-crafted small business owner estate plan can protect your company and family from these risks and can reduce liability for estate taxes.estate planning for small business owners

Many small business owners are well advised to execute a last will and testament and a power of attorney. If properly drafted with your succession plan, this will enable a third person to handle company affairs and execute your plan in case you are disabled, or speed up the process of probating your estate by removing questions and disputes about company ownership and management transitions. Many business owners also establish revocable and irrevocable trusts, including irrevocable life insurance trusts. Revocable trusts are useful for smooth transitions of property upon death, but generally do not convey estate tax benefits. Irrevocable trusts can be structured in many ways to control and limit both gift taxes and estate tax liability.

Beyond the financial issues that affect your family, your estate plan provides for the health and protection of your family and loved ones. Business owners with children and other family owned businesses may consider family estate planning for children with designation of guardians, durable powers of attorney for elder members of the family, advance medical directives and healthcare power of attorney, or special needs trusts to protect loved ones with special challenges.

Small business owner estate planning is essential to ensure the continued health and wellbeing of your family and your company. Every small business owner has unique family, asset protection, and business succession matters to address, which makes it important to seek consultation with a Texas estate planning attorney to address the specifics of your situation.

Disclaimer: This article is not legal advice and does not create an attorney client relationship. To reach the attorney responsible for this article please contact The Blake Law Firm PLLC, 9442 N. Capital of Texas Hwy, Arboretum Plaza One Ste 500-181, Austin, Texas 78759 (512) 651-3930.

Topics: Featured, Legal, Blog Posts

James Blake

The Blake Law Firm, PLLC.

James Blake is a growth-oriented business attorney who strives to be a creative business partner, to identify value-add opportunities, and to crystallize the relationships, structures, and processes that will drive your commercial success. James Blake practices law in Texas and Hawaii, and has protected the interests of businesses across a broad range of industries, including technology, construction, service and retail, food and beverage, franchisors and franchisees, product manufacturers, and investors. His work experience encompasses commercial transactions, litigation, and advising business operations in the U.S., Africa, and Asia. James was an editor of Law Review at the University of Hawaii and conducted international commercial law research for the Institute of Asian Pacific Business Law. He served as the Official Reporter for the 2008 IAPBL China Enterprise Bankruptcy Law Symposium held in Hong Kong, and in the same year worked at a large firm in Singapore. James currently advises clients in international business and investment issues in addition serving his client’s legal and business needs in Hawaii and Texas. Currently based in Austin, Texas, James is an avid writer and enjoys speaking at business-law seminars in addition to his legal practice. In his spare time, James enjoys sculling and kayaking on Ladybird Lake, outdoor photography, and supporting visual and performing arts.
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