Did you know that up to 60 percent of people in the United States of America lack any of the estate planning basics? Estate and trust planning are vital for anyone that has a lot of assets and is getting up there in age. It is even more vital if you’re a business owner and you need to handle business estate planning for your descendants.
You can always hire an estate planning lawyer to help you out with taking care of the basics of estate planning and trusts. Still, it’s always best to do your own research and learn as much as you can about the importance of estate and trust planning for your wealth.
The good news is that you’re in the perfect place to learn about the proper documents for estate planning and the benefits of taking care of estate planning sooner than later. Keep reading this article to learn more today!
Your Family Depends On It
The simple truth about the situation is that your family likely depends on you getting the estate and trust planning taken care of. Most business owners have a ton of their wealth tied up in the equity of their business. Up to 80 percent of their wealth is in their business, which means that getting business estate planning is critical to figure out prior to passing away.
You run the risk of the equity in your business, and your wealth as a whole, disintegrating or dissolving completely. You can try to minimize the risk of that happening by getting long-term disability insurance coverage but that still won’t make up for the loss of wealth if your equity in your business disappears.
Business Will Go Out of Business
Another big thing that business owners need to consider when it comes to estate and trust planning is the plan for continuity in your business. You need to think ahead about who will run the day-to-day operations at your business if you pass away. If you have managers that can run the show without you then you need to determine who takes over in your absence.
Odds are that you’re at the heart of the vision for the company as well as the normal operations. You’re asking your managers to fill big shoes by handling those things without you. You also need to think about any stakeholders in your business when it comes to estate planning and trusts.
There are a number of people that get impacted if your business folds after you pass away. It will cause your employees to lose their jobs and it will hurt the local economy in your area. Using estate planning tips will help you stay ahead of the curve.
It’s Your Chance to Direct Your Estate
Many people tend to put business succession and estate planning together when it comes to business owners that are getting up there in years. These are oddly two very different concepts that you need to handle separately if you want to have success and organization.
Your succession planning should be your analysis of who should run the business after you pass away. Estate planning is more focused on passing on your assets and liabilities after your passing and determining who those things will go to at that point in time.
The most basic cases of estate and trust planning can get complicated by other factors, like how good your beneficiaries are at managing money. You also need to think about friends and other family members with that you’d like to leave things. Don’t underestimate the process of estate planning basics when you start this process.
Consider Your Debts
You also need to remember that odds are that your business has some lines of credit open for your business operations. You might have had to offer some business assets up as collateral in the case that you couldn’t handle the loan repayment. Other lines of credit could be under your name rather than your business’s.
There are often clauses with lines of credit that the money owed needs to get paid in full if the owner of the business dies. This could be a big issue since the money owed might be more than the capital possessed by the business. Make sure that you incorporate all of your assets and liabilities in your succession plan if you’re a business owner.
Promote Your Values
Estate and trust planning is also a great chance for you to promote and show off your values. Many successful business owners have the values of their businesses mirror their own values. They have a strong view of the world and a strong idea of what the world could be.
Perhaps the reason that they start their business in the first place is an attempt to help the world around them reach the potential that they see within it. Estate planning basics are great for promoting those values even after you pass away. You should consider putting together a board of trustees to make sure that your beneficiaries use the money they inherit in ways that mirror your values.
Manage Your Taxes
You can also use estate planning and trusts as a way to manage your taxes if you’re worried that you’ll pass away soon. If you have a lot of your value tied up in your business’s equity then business succession will be an event that the government can tax. It will result in the highest tax bill you’ll ever encounter.
Working with an estate planning lawyer will help you mitigate the pain of that tax bill after you pass away. It will make life much easier for your business and your beneficiaries.
Start Your Estate and Trust Planning Today
Estate and trust planning is vital as a business owner if you think you’re coming to the end of your life, especially if much of your wealth is tied up in your business’s equity. You can use the estate planning basics as a way to promote your values and pass your wealth on to your beneficiaries. It’s also a great time to come up with a succession plan for your business to keep it running.
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