If you are a small business owner, estate planning for your business is just as important as estate planning for yourself. Having a well written plan for your small business ensures that your business operates smoothly after a transition of ownership.
Whether you have a Limited Liability Company (LLC) or a Professional Limited Liability Company (PLLC), you can put your small business into a revocable trust in order for your business to avoid probate court. Putting your small business into trust will cut out the time your business would be waiting for a transfer of title, as well as eliminate the inventory fee your estate would otherwise pay if it was in probate court. Your business could sit in probate for a minimum of six months, and an inventory fee is 3-5% of your total assets in probate. Putting your company into a trust is the first step in ensuring a quick and smooth transition to your beneficiaries.
To start planning for the future of your business, you will have to create a long-term business plan. Your estate plan will not have its own estate plan, rather your small business will be incorporated into your current estate plan. Be sure to take some time to plan for the following items:
Ownership after Death: It is important to plan for who will be taking over your small business in your estate plan.
- If you co-own a company with other people, maybe your goal is that the other co-owners will continue the company and buy-out your share in a buy-sell agreement. If you are interested in a buy-sell agreement, that is something that can be put into place now so that in the event of death, the co-owners are able to buy out your ownership and continue running the business.
- If your plan is to give your ownership of your business to a spouse, a child, or split between multiple people, we can add your business to a trust which allows you to distribute your business as you see fit. You could also specify if you wish for your business to be sold after death or ensure dissolution and wind-up of your business.
Equity in the business: If you have equity in a business, you will want to include that in your existing estate plan. Your existing equity in a business can be added to your trust for the beneficiary’s benefit.
Tax plan: When creating a succession for your small business, it is important to work with an attorney and accountant to ensure you are minimizing estate tax. Often, a business can affect an estate plan which would otherwise avoid estate tax.
At Sullivan Law, we offer estate planning packages at a flat and reasonable fee. We also offer free consultations to discuss what your needs are, what you would like to do, and how that can be best accomplished. Everyone’s needs are different, and your wishes should be clearly listed and understood.
Call us at 248.917.1351 or email at asullivan@sullivanlawonline.com to schedule your free consultation today and start an estate plan for your small business. We look forward to working with you!