The average business only lasts 10 years, according to Time, but your business may be around for much longer—even longer than you. Your business is part of your legacy, and when you are no longer there to keep it running, what is to keep it from going under?
Estate planning for your business is a necessary step to take in order for your business to continue in the direction that you left it. Additionally, estate planning for your business leaves your family without any questions regarding your business wishes and reduces taxes that your estate will have to pay when leaving it to a beneficiary. A DuPage County estate planning attorney can help you get started at once.
Reducing Taxes with a Grantor Retained Annuity Trust
A Grantor Retained Annuity Trust (GRAT) can be used to minimize taxes when you pass your assets (your business) down to your beneficiaries. When you create the trust, you pay an annuity tax every year for the assets placed within it. After a specified number of years, the trust expires and the beneficiary receives the assets. Moreover, the beneficiary will not owe any taxes on the business.
Who is to Become an Owner?
In the event that you die before naming a successor to your business, your family will inherit the business as owners, which may not be what you want, especially if there are multiple co-owners involved. A buy-sell agreement will ensure that there are not accidental owners. This agreement will enable the deceased owner to automatically sell his or her share of the company to the other owners, providing money to his or her estate while keeping your co-owners happy and the business healthy.
Creating a Succession Plan
A study found that businesses that had a sole owner die were down 60 percent in sales four years after the owner’s death, as reported in Forbes. “It seems founder-entrepreneurs are the ‘glue’ that helps to hold a business together,” according to the researchers. One of the key reasons why a business either fails or succeeds is because of the owner’s vision. Once that vision is lost, however, the business fails.
A succession plan is part of any good estate plan, and will help those left behind to direct your business onto the correct path. Longevity in businesses is rare because most owners do not have a succession plan. When their beneficiaries take over or another owner purchases the business, the original vision is lost.
A DuPage County Attorney is Here to Help Create an Estate Plan Today
Whether your business was handed down to you by your mother or father, or you just started your business a few years ago, having an estate plan is a wise idea. It will help protect your assets, your family’s finances, and your business’ direction after you are gone. Do not hesitate to reach out to a passionate DuPage County estate planning attorney with Momkus McCluskey Roberts LLC today.