Estate Planning for Family-Owned Businesses
Our firm can be of assistance if you are planning your estate as a family business owner. You may have estate tax concerns, or you may simply want to facilitate a smooth transition as you pass the business on to the next generation. We will gain an understanding of your unique situation, offer solutions, and help you create a plan that ideally suits your needs.
There may be multiple family members who are partners in your business. An estate plan for the owners of a family business can include a document called a buy-sell agreement.
The partners determine the value of a share in the business. With the cross purchase plan, each partner purchases a life insurance policy on every other partner.
When one partner dies, the survivors use the insurance proceeds to purchase the share in the business that was owned by the deceased partner. When you plan your estate you could arrange for the proceeds to be distributed among your heirs as you see fit.
Balancing Inheritances With Life Insurance
Let’s say that you have two children, and you are the sole proprietor of a family-run business. Your daughter has worked in the business all of her life. You want to leave her the business after you pass away.
Your son embarked on a career path of his own outside of the family business. You want to provide for each of your children equally, but the business is by far your most valuable asset.
You could balance inheritances by making your son the beneficiary of an insurance policy on your life. The value of the policy would be calculated to equal the value of the business that you intend to leave to your daughter.
Estate taxes can be a factor for some family business owners. The federal estate tax is part of the equation, and we have a state-level estate tax here in the state of Connecticut.
If you do not plan ahead properly, your heirs could be forced to sell the business to pay death taxes.
Schedule a Free Hartford, CT Family Business Planning Consultation
Careful and informed planning is a must for family business owners. Contact us through this website to request a free consultation, or give us a call at (860) 548-1000.