Many people are under the assumption that estate planning and asset protection are only for the very wealthy. However, as a business owner, estate planning and asset protection are critical for protecting your business, your wealth, and your family.

Most business owners think that having a will or a life insurance policy is sufficient estate planning. While this is a good start, it is certainly not sufficient. The same holds true when it comes to asset protection.

Many believe they are protected by having liability protection and the customary insurance on property, cars, homes, etc. While insurance is important, it represents only part of what is needed to adequately protect your personal and business assets. Asset protection and estate planning are necessary for the protection of your assets while living and upon your death. If not done correctly, your assets can be wiped out by unforeseen taxes, lawsuits, and many other unfortunate circumstances.

Estate Planning is the ability to plan for the distribution of your assets upon your incapacity or death, in order to ensure consistency with your wishes. It includes the ability to:

  • Preserve and protect the privacy of and financial security of your spouse and heirs
  • Plan for the uninterrupted continued management or sale of your business
  • Promote charitable endeavors that are meaningful to you

Estate planning includes basic will and trust as well as documents such as Durable Power of Attorney and Living Wills while you are alive, which is also part of contingency planning.

Estate planning is a critical part of ownership transition planning. Owners should work with an estate attorney who is specifically trained in business owner planning techniques, in order to understand what their estate tax exposure would be if they were to pass away and how their business will be owned.

Advanced estate planning techniques may benefit many owners by allowing them to:

  • Minimize taxes whether the plan is to transfer the business internally or externally to outside buyers
  • Set aside wealth for their heirs, charities or others
  • Give away up to $5+ million of wealth ($10+ million if married) either while living (called Gifting) or after they die (as part of estate)
  • Utilize trusts or other estate planning techniques to protect wealth in excess of the exemption from taxes
  • Gift or “set aside” some or most of their ownership shares at fair market value thereby allowing their shares to appreciate outside of their estate
  • Purchase life insurance to pay for estate taxes that cannot be avoided

As a business owner, it’s extremely important that you start estate planning as soon as possible. It's likely that a significant portion of your wealth — and your family's future source of income — is tied up in your business and at risk. Estate planning is a key component of your Business Ownership Transition Plan whether you are transitioning to the next generation or to an outside buyer. At Business Transition Academy, we educate our clients on the principles of estate planning and include it in their plan. We work with many highly competent and experienced estate planning and asset protection professionals to ensure that our clients have the best possible outcome.



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