Estate planning for business owners: five decisions to make early
Estate planning is more than writing a will. For a business owner, the plan also needs to address control, liquidity and continuity if the owner dies or becomes unable to manage the business.
1. Identify who will make decisions
Review wills, powers of attorney, corporate records and any shareholder agreements with legal counsel. Confirm who can act for the business and family, and whether the documents work together.
2. Plan for business continuity
Document essential operations, signing authority, key contacts and succession intentions. A buy-sell or shareholder agreement may help establish how an ownership interest transfers, but its funding and valuation provisions need regular review.
3. Estimate liquidity needs
Taxes, debts, operating expenses, family support and shareholder obligations may come due before assets can be sold. A liquidity assessment can help identify whether cash reserves, financing, insurance or other arrangements are appropriate.
4. Review beneficiaries and ownership
Beneficiary designations, jointly held property, corporate shares and trust arrangements may not all follow the same path as assets distributed under a will. The legal and tax consequences are fact-specific and can change with family circumstances.
5. Coordinate the professionals
An estate lawyer, accountant, corporate adviser and licensed insurance advisor may each address different parts of the plan. Ask them to review assumptions together, particularly around valuation, taxes, ownership transfers and funding.
Takeaway: The most useful estate plan is one that can actually be administered. Revisit it after major changes to ownership, family circumstances or the business.