Estate Planning For The Future Of Your Business

At Dinn, Hochman & Potter, LLC, we provide attentive, responsive and knowledgeable guidance through the estate and succession planning process.

Estate Planning For Families And Individuals

It is crucial that every person have an estate plan tailored to his or her specific situation and needs. This plan should include, at the very least, a will, financial power of attorney, medical power of attorney and any applicable trusts.

Any trusts included in the plan should be customized to the individual’s assets, family dynamics, business interests and other personal factors. These can include charitable trusts, grants and annuity trusts, with arrangements made to provide for your family through the future.

Estate Planning For Business Owners

Business owners and their families must take additional consideration when preparing an estate plan. It is important that the correct tools are in place beforehand to ensure a seamless transition for the business.

We understand business and how it is affected by the passing of an owner or part owner. Our lawyers apply that foresight to our clients’ situations, providing plans that will allow for smooth succession of assets, management and shares of the business.

In some instances, this business succession requires setting up a family limited partnership and limited liability companies (LLCs) to limit financial exposure to the family.

Estate Planning For Different Business Entities

Estate planning differs depending on the business structure:

• Sole proprietorships: The business is legally inseparable from the owner, so without a clear succession plan, the business may be subject to liquidation. Transferring ownership in a will or setting up a trust can help ensure business continuity.
• Partnerships: Estate planning should include agreements on what happens to the partnership upon the death of a partner. A buy-sell agreement can help ensure the remaining partners retain control or provide financial compensation to the deceased partner’s heirs.
• Limited liability companies (LLCs): LLC owners can pass their shares to heirs through estate planning tools like trusts. This allows for a smooth transfer of ownership while potentially avoiding probate.
• Corporations: Shares in a corporation are treated like personal assets and can be transferred via a will or trust. However, additional considerations, such as voting rights and corporate governance, should be addressed in the estate plan.

In many cases, consulting with a lawyer is crucial for developing strategies that reduce tax exposure and protect family members from significant financial liability during the probate process.

Importance Of Regular Business Valuations

Regular business valuations are crucial for estate tax purposes. The IRS will evaluate your business based on its fair market value at the time of your death, which can significantly impact estate taxes. To avoid unexpected tax burdens, it is recommended that business owners:

• Conduct regular valuations to have an updated, accurate assessment of their business’s worth.
• Implement strategies such as gifting shares to reduce the taxable estate.
• Plan for liquidity to cover any potential estate tax liabilities.

Being proactive about business valuations can save your family from financial strain and protect your business assets from unexpected tax consequences.

Probate Law

We are also available to assist in the probate process, means of avoiding probate and any necessary probate litigation that might arise.

How Probate Can Impact A Business

If a business is subject to probate, the process can create delays, expose the business to public scrutiny and lead to potential disputes among heirs.

A well-crafted estate plan can minimize the risk of probate disruptions by using tools such as:

• Living trusts: These can transfer business assets directly to beneficiaries without probate.
• Buy-sell agreements: These prearranged agreements allow co-owners to purchase a deceased owner’s interest, maintaining business continuity.
• Powers of attorney: Financial and business powers of attorney can authorize a designated individual to manage the business during incapacitation or after death.

Strategic planning can help keep your business running smoothly and avoid unnecessary complications during a challenging time.

Discuss Your Unique Estate Planning Needs

To arrange an initial consultation to discuss your estate planning needs, please contact our law firm today at 440-446-1100.