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Addressing a successful business in an estate plan

On Behalf of | Feb 2, 2025 | Estate Planning

Every person’s estate is different. The assets that belong to an individual become their estate when they die. Those resources may need to pass through probate court. The courts can assist with the application of intestate succession laws if the testator dies without a will. If they have a will, the courts can help ensure that the personal representative fulfills their financial obligations and upholds their instructions.

Some people need to create more thorough estate plans than others because of their personal resources. Those who own businesses or professional practices typically need to address them in their estate plans.

Businesses require careful consideration

When a business owner starts thinking about what happens after, they die they need to think about the future of the company. They may have to ponder some complicated questions as they start developing an estate plan.

Those questions include:

  • Do they expect the organization to continue operating?
  • Is it a small professional practice that is likely to close when they retire or die?
  • Are there employees to consider?
  • Does the business have any debts to address?
  • Are any family members interested in or capable of taking over the business?

These are all important questions to contemplate before committing to a specific plan regarding the business.

What issues can business owners address in an estate plan?

Business owners can choose someone to take over the company when they pass. They can also potentially allow ownership of the business to pass to specific beneficiaries. If they have a beneficiary capable of running the business, the person who inherits the company could also run it.

They might want to use a business trust to allow a competent trustee to run the business while their family members receive support from the company’s ongoing profits. Some business owners want their personal representatives to close the business and liquidate its assets. Others might leave instructions to list the business for sale and distribute the proceeds from that transaction to specific beneficiaries.

Given that businesses can be relatively valuable, owners may need to consider the possibility of estate taxes. If their estate, including the business, is worth more than $13.99 million, then they may have to prepare for the possibility of estate taxes.

Having a rough idea of personal priorities related to a business or professional practice can help facilitate a smoother estate planning process.