Transferring a Business Through Your Estate Plan
Estate plans don’t just help you transfer property to your heirs — they may also help ensure a smooth transition in the ownership of your business. The type of business inheritance plan you put together depends on whether you want to pass control to your heirs before or after your death and whether you are passing on a functioning business or liquidating your interest in the company.
First, you will need to consider how putting a business in your estate plan could affect estate taxes. In most cases, people don’t have to worry about estate taxes because the minimum estate value for those taxes to apply is high. However, even a small business could put your estate over the mandatory minimum amount, which could add some complicated tax issues to administering your estate.
You might consider including a buy-sell agreement in your estate plan. This agreement essentially means your business will be sold when a certain event occurs or condition is met, such as your death or retirement. This is a useful type of contract if you already know you have a business partner to whom you wish to give control of the company, and you want to make sure your beneficiaries don’t have to negotiate a price. You can even keep the value of the business out of your estate by putting a stipulation in the agreement instructing the buyer to transfer the price of the sale into a trust to benefit your heirs.
Finally, the way you transfer your estate could also depend on the structure of the business. A small, family partnership has many different considerations to take into account compared to a larger business.
For the assistance you need when planning for the future of your business, consult a knowledgeable Florida estate planning attorney with the Charles Law Offices.