Pursuing Peace Of Mind For You And Your Family

How to ensure that your business will live on after you

If you are a business owner, your company is an important part of who you are.

But what will happen to the business when you are no longer here? You can keep the company up and running with the help of some prudent estate planning.

Consider a buy-sell agreement

Perhaps you have one or more co-owners. You can create a buy-sell agreement. Upon the death of an owner, the other owners automatically purchase his or her interest in the business. This kind of agreement ensures that the family members of the deceased do not unintentionally become owners. You can purchase life insurance to provide the liquidity the buy-sell agreement requires.

Create a succession plan

You can create a succession plan for the transfer of ownership and management of your business. The plan might include:

  • Development and training of successors
  • Transfer of responsibility and authority to successors
  • Inclusion of outside advisers and directors for the succession process
  • Plan for the retention of key employees

Establish a trust

If you wish to transfer business assets to the children and still maintain income for yourself, consider establishing a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). In the event the assets grow, your family members will not have to pay estate taxes on the appreciation.

Minimize taxes

You can use an ILIT or Irrevocable Life Insurance Trust to address liquidity problems, such as the difference between the worth of your business today versus its worth at the time of your death. The ILIT links to an insurance policy. Benefits from the policy are not subject to probate, so cash is immediately available for needs such as estate taxes. The ILIT is just one more example of estate planning ideas that will help ensure your company can continue when you are no longer here.