An estate planning attorney should be consulted if you are a business owner so you can take steps to ensure you have made appropriate plans for the survival of your company after you are gone. You want to ensure that your company is able to survive long beyond your years so you can pass your business down to the next generation. Your company should serve as your legacy, but it is up to you to make certain that you can actually pass your business on.
There are different ways to facilitate the transfer of a business and an experienced attorney at Frank & Kraft can help you to identify the best approach for your particular situation. It is important to understand the pitfalls associated with the transfer of a business and to make certain that you address any potential sources of loss that could affect your company as it changes owners. Frank & Kraft makes this process easy and helps you to create a plan for the transfer of your company that is right for you. Give us a call today to find out more about how we can help.
Tips for Transferring a Business to Your Kids
When you make a plan to transfer your company to your kids, it is important to consider both what could happen if you transfer your company during your lifetime and what could happen if you transfer the company after you have passed away.
If you transfer the ownership of the business and its assets during your lifetime, this could trigger gift taxes if the business and its assets are very valuable. If you have not transferred the business and you become incapacitated by illness and injury and unable to run the company, this could create a period of uncertainty where it is not clear who has legal authority to manage the business. The creation of an incapacity plan could be vital in order to ensure that your children can seamlessly take control over the company if something happens to you.
If you transfer the company after your death, there is a risk of estate tax being triggered. Since the company is valuable, it could push the value of your estate above the excludable amount and your entire estate could end up being taxed as a result. If you do not have liquid cash available in your estate to pay for the estate tax, this could create a serious problem.
Assets could have to be sold – and in some cases even the business itself might need to be sold – just to generate enough money for estate tax to be paid. Your heirs or beneficiaries could also be forced to take out a loan so estate taxes can be paid, thus making the continued profitability of the company into a much more difficult prospect.
If you allow your company to pass through the probate process, this process also takes a long time to happen and your business could be again left in a state of flux where new owners do not yet have authority to take control of the management of the company.
There are also issues with the simple logistics of actually transferring ownership that have to be addressed. Some of the best ways that you can work to resolve all of these issues can include using tools such as family limited partnerships, incorporations, and trusts. You’ll want to think about the issues associated with passing a business onto your kids, work with an experienced attorney to make a business succession plan, put your business succession plan in writing and then use the tools that will allow you to keep your company safe from common sources of loss such as a big tax bill.
Getting Help from An Estate Planning Attorney
An estate planning attorney at Frank & Kraft will provide personalized one-on-one help with the creation of a business succession plan so your company can easily be passed on to your loved ones and continue operations long after you are gone.
We will work closely with you to incorporate your business, form a partnership or otherwise carry out the most appropriate plan for allowing you company to serve as your legacy. To find out more about the ways in which our legal team helps you to facilitate the transfer of a company to new owners, join us for a free seminar. You can also give us a call at 317-684-1100 or contact us online to get personalized one-on-one help with making a plan to transfer your business to the next generation.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.