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6 Estate Planning Tips for Your Naples Area Business

As a business owner, you’ve invested time, money and your heart into building your Naples area-based income producing enterprise. Estate planning is a legal method of protecting the business in case of unfortunate events. It’s a tailored business tool to control and manage the wealth you’ve built by preventing taxation seizures and safeguarding the intended transfer of ownership without interruption to the business.

Small businesses or family-owned organizations are traditionally owner dependent models. By starting the estate planning process early, you’re assured the business will continue as a multi-generation operation. The other option is to consider selling the business on your death to an outside source.  This is known as a Buy - Sell Agreement. If you chose the second option, estate planning steps make sure your wishes are executed.

1. Know the Facts

Like it or not – things don’t always go as planned. For this reason, an estate planner can help family members and business associates understand what is going to happen. It's time to have an open discussion with the group. By sharing your decisions and setting the plan in place, you will avoid misunderstandings and legal interferences associated with the ownership of business assets.

2. Entity Form

The worth of the business changes from the first day of opening to the day its passes on through the process of estate planning. This is where meeting with a professional estate planner can help with making the right decisions. The entity’s form can be designated as the holder of the business assets. 

Whether you chose to form a family limited partnership or a family limited liability company you can transfer portions to your successors. The process eliminates these portions from the taxable estate. Because limited partnership interests don’t control the partnership value – the transferred assets can be issued as a gift – reducing taxes.

3. Liabilities & Creditor Debts

Business liability insurance should continue for a reasonable amount of time. Your estate planner can help you choose the timeframe. The purpose is to protect the successor or surviving members against alleged lawsuits against the business. Preplanning also assures the creditors that the business remains intact or the process of closure includes collection or debt payment schedules. 

4. Assigning a Executor

The executor’s task is to manage the estate plan and carry out its instructions. Because the process can get complicated – an experienced professional is more readily prepared to address the legal aspects.

5. Inheritance & Beneficiaries

Copies of the business’s life insurance policies, retirement plans, and property deeds or leases need to be identified in the estate plan. Traditionally, income generated by owner dependent businesses is deposited into payable-on-death bank accounts. These accounts are part of the distribution process and need to be identified.

6. Review and Update

Business ventures, life and tax laws change through the years. Be sure to update your estate plan annually. Because business liabilities are linked to special tax considerations, the first organization to enter the discussion is the Internal Revenue Service.

Here’s your chance to voice exactly what should happen in case of death. Estate planning is a lawful necessity for the business, separate from a will and equally important. Think of it as a protective course of action for the business and the survivors. Take the time to meet with an estate planner and have an open discussion with everyone involved. You will find it prevents business interruptions, unexpected estate taxation, and internal disputes.

If you have questions or need a second opinion about your business planning needs, call us at 941-778-1900 or click here  to complete our contact form.  We work with a select group of women who desire our personal, yet structured process for planning and investing that relieves them of the day-to-day worry of the financial markets with freedom to pursue what they value most and allows them to feel confident and reassured. We call this process the “Waypoint Formula”.