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.
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.