ESTATE PLANNING TIPS FOR THE OWNER-DEPENDENT BUSINESS
Operating a business dependent upon your skills and expertise makes you a very valuable person to your business, but could leave your income (and your family’s well-being) at risk if and when something happens to you.
Maybe you have not considered how important estate planning is because you’ve just accepted the fact that your business will end when you do. However, it is important to understand that your loved ones could be left with a significant financial burden when you die.
If you handle business operations, the value of your business is intimately tied to you and the work you put into it. Thus, the value greatly reduces after you die. Even so, your family could be stuck with an estate tax that reflects the value of your business right before your death.
To offset this financial obligation, you have a few options:
- Obtain life insurance to provide liquidity to pay estate taxes and wind down the business after you die (also consider disability insurance, in case you become incapacitated first);
- Consider a full succession plan that considers all the possibilities for the future of your business after you are gone; and
- Clearly document your intent to have the business close its doors when you die and limit the transferability of the business, so that your family can clearly prove there is no value without you.
Additionally, consider extending liability insurance for a period of time after your death. This will account for the statute of limitations under which clients or customers can file a claim, thus reducing your family’s liability.
At Kira Doyle Law, we understand that your time and protecting your business is valuable. If you are ready to move forward with preventative planning for your business, start by calling our office in St. Petersburg, Florida, at 727-537-6818, to schedule an appointment with one of our experienced Business Planning Attorneys today!