If you are a business owner, your business probably forms a large part of your estate assets. In setting up your estate plan, you need to first decide what you want to do with the business when you do not wish to work any longer. Do you have the type of business that can be sold to someone else (this could be a family member, a key employee, or a totally unknown third party). This type of business does not rely on you to be there to either market the business or run the day-to-day operations. This type of business has a product that anyone can sell or a service that only you can provide to your clients. If you make all the important decisions in your business, and all of your employees are support and clerical staff, then it is likely that your business will die as soon as you retire. Your estate plan must include a way for you to protect your income from the business from disappearing due to disability or your early death. This can be accomplished with various types of insurance and saving the maximum allowed in qualified retirement accounts.

What if you plan to have your children or other family members take over the business when you wish to retire? Your estate plan should have a way for you to transfer the ownership and management of your business to your family member(s) who will be working in the business. If you have one or more children, and not all of the children will be working in the business, you need a different mechanism, separating ownership interests from management responsibilities.

If you have a business partner, you need to involve your business partner in your estate planning. After all, your partner may not want to work with your family members, or he may have his own children who want to work in and own part of the business.

Giving or selling your business to the next generation involves a great deal of discussion among the family members so each one understands what you want his role to be and agrees to that role. You have extra complications if one of your children is working in your business but you don’t think he is good management material.

Depending on the success of your business, your estate may be liable for federal or state estate taxes when you die. You must ask your estate planning lawyer how to minimize the amount of estate taxes your estate will owe. After all, you do not want your family to have to sell the business to pay the estate taxes.

If you decide that it might be easier to sell your business to a third party, you want to structure the sale to minimize income and capital gains taxes. You want to ensure that you get all the value out of your business that you can before something unexpected happens and your business is suddenly crashing in value and your buyer backs out. A good estate planning lawyer will help you to protect the lump sum or installments that you receive from the sale of your business while you are alive and transfer as much of it intact to your heirs when you are gone. This is good estate planning.

Only when you think through what you want to do with your business will you be able to have a useful conversation with an estate planning lawyer. But a good estate planning lawyer knows what questions to ask you to get you thinking about what your options with your business are and how to reach your goals using the techniques that the law allows.

Have the conversation with your business and estate planning lawyer sooner rather than later. You will find that it is a very profitable conversation.

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