A Leading Business & Estate Planning Law Firm That’s Here For You

More than just a law firm

Protecting Your Business: Key Considerations In Estate Planning For Entrepreneurs

In this article, you can discover…

How to transfer control of your business in your estate plans.
How to minimize taxation through business estate planning.
How often to review and update your business estate plans.

How Does The Structure Of My Business Impact Estate Planning Decisions In Nevada?

If you own a business as a sole proprietor, the business ceases to exist once you pass away. This makes sole proprietorship a poor option if you wish to pass on your business to your children or otherwise maximize the benefits of what you’ve built.

An LLC, partnership, or corporation is a far better option, as this allows your enterprise to be passed down and continue once you’ve passed away. What’s more, an LLC or a partnership tends to be less heavily taxed than a corporation. A knowledgeable attorney can help you build valuation mechanisms into the LLC or partnership structure to reduce the taxes payable on your death and make the transfer of the business to your children more efficient.

What Should I Consider When Transferring Ownership And Control Of My Business?

The first thing to consider is the governing document for the entity that holds your business. This text needs to ensure that, depending on who you wish to pass control to, either third-party partners are included in the transition or that they are excluded to ensure a smooth transition of the business to your children. Secure and well-written governing documents can also help protect your business from over-taxation upon your death, allowing it to continue to exist and grow.

The second consideration rests with transition documents, namely your will or trust. In Nevada, these documents help ensure that the benefits of the business are preserved, gathered, and distributed to your chosen beneficiaries. They also help ensure that management is given over to the person or persons you’ve designated within the written trust.

How Can Buy-Sell Agreements Be Integrated Into An Estate Plan To Ensure A Smooth Transition?

Buy-sell agreements can help ensure that the transition of a business is agreeable and unambiguous through careful, meticulous drafting and an understanding of how ownership will proceed after a business partner or LLC member passes away. Careful communication with all partners or LLC members is needed to make sure that all parties agree on future arrangements and ownership, as no one can be legally forced into a business partnership if they find the arrangement disagreeable.

It’s also possible to draft buy-sell agreements that allow for surviving business partners to sell the business if they no longer wish to carry it on. Remaining partners may also buy one another out, allowing disinterested parties to move on while keeping the enterprise with those who have an active interest in its management and continuation.

Attorney Kent Woods is a dedicated and diligent lawyer serving Las Vegas, Nevada. With over 15 years of experience, he’s helped entrepreneurs just like you protect their businesses, protect their estates, and plan for the future with oversight and care.

Have questions about estate and business planning?
Reach out to The Law Office Of Kent P. Woods at (702) 703-1540 for an initial consultation today!

How Can Estate Planning Help Minimize Taxation During The Transfer Of A Business?

On the death of a business owner, the government will typically demand a 40% share of the estate after relevant estate tax exclusion. This is a huge quantity, and often demands the liquidation of other assets, such as a family home, to help pay off this amount.

Fortunately, there are a number of options that you and your attorney can discuss and use to help protect your business from over-taxation and ensure its survival.

One option is for your attorney to maximize the portability of an estate tax exclusion, allowing you to safeguard protected amounts from taxation. For example, a $13 million estate tax exclusion can be re-configured into a $26 million estate tax exclusion, doubling the amount of money you can protect and hold on to.

Trusts can also help protect your enterprise. Pieces of the business can be given away to a carefully drafted trust, pushing it outside of your taxable estate and protecting it from the IRS upon your passing.

Finally, a third option is a life insurance trust. Setting up what is known as an irrevocable life insurance trust helps keep the amount of the insurance policy outside of taxable income. This full amount can then be used to cover the 40% taxes owed and can allow beneficiaries to retain the full value of the business and move forward with fewer setbacks or expenses.

Can My Estate Plan Address Or Protect Key Client Relationships?

The simplest way to address key client relationships is to ensure that services continue without interruption. While no one can force a major client to continue a professional relationship, these dynamics can be best preserved by continuing excellent service and meeting the client’s needs without interruption. The easiest way to do this is with secure, well-written, and clear estate documents in place.

What Steps Should I Take To Ensure That My Business Succession Plan Aligns With My Overall Planning Goals And Objectives?

The best way to ensure that your business estate plans and overall goals are on the same page is to have the same competent, conscientious attorney handling both business and estate planning matters. A lawyer well-versed in both aspects of the law can help streamline your vision across multiple key areas and make sure that your business plans are on board with the rest of your estate wishes.

How Often Should I Review And Update My Business Estate Plan?

In general, reviewing your business and estate matters with an attorney once a year is advisable. Major events such as a divorce, lawsuit, significant lifestyle changes, or changes to how your business is run would also warrant estate plan revision.

Even more helpful than this, however, is to work closely with an attorney whom you trust and who knows your business inside and out. They can recommend changes as they see fit and help adjust your estate plans in light of shifting personal, legal, or financial circumstances. Crisis situations such as a massive overhaul of regulatory or tax law can be dealt with by a knowledgeable and personally invested advisor who understands your needs, your family’s needs, and your vision for your business.

For more information on Considerations In Estate Planning For Entrepreneurs, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (702) 703-1540 today.