Business Owners Need Up-to-Date Estate Plans
Business owners are always looking for an edge in everything they do, especially when it comes to avoiding taxes to the extent possible. Because there are estate and gift taxes to consider, among other things, one would think that all business owners would be interested in estate planning.
However, they're really not, apparently. Well, not all of them, anyway. A recent survey showed that about 30 percent of business owners had any kind of an estate plan, even something as simple as a will. Despite their willingness to dive into the murky waters of business, most of those who choose not to do any estate planning cite the same reason that most non-businesspeople do; they don't like dealing with the topic.
That means any of the topics related to estate planning, from thinking about the prospect of dying someday, to making difficult decisions regarding the disposition of personal assets among family, friends and charities, or even thinking about the fate of their business when they pass on. They consider all of it emotionally wrenching.
The thing is, as important is for virtually anyone to plan their estate properly, it is doubly important for someone with a business to do so. It's not just about taxes, although you will want to minimize their effect on your loved ones when the time comes. It's also about making sure your family, friends and other heirs are taken care of. It's also about making sure all of your business interests are taken care of, whether you want the business to live on for your children or disbanded and carefully disposed of when you pass on.
The thing is, estate planning isn't usually as difficult as many business owners apparently believe. For instance, there are strategies and tools available, such as traditional life insurance and certain types of trust instruments, that are not only uncomplicated, but also sufficient for the vast majority of business owners. Of course, some situations can be complicated, but just as a smart businessman will hire an accountant to handle his financial details, hiring an experienced and qualified estate planning attorney is a wise choice for those situations.
There is no excuse for anyone who owns a business to not have any sort of estate plan, even if it's just a will. If your business is successful, it's likely to be a very important part of your estate and should be taken care of. Even if it's not now, there's always a hope that it will in the future.
Almost as troubling as the fact that 30 percent of businesspeople haven't bothered comes with another part of the survey, in which those with estate plans largely don't update them regularly. Only 12 percent of them were less than two years old, while 24 percent were between two and five years old and more than 60 percent of those businesspeople who have an estate plan have one that is more than five years old.
It's very important for business owners to update any plan that is more than five years old, primarily because of numerous changes in the tax code. It is also important to keep estate plans up to date, in order to keep up with other changes, not the least of which are changes in the business model and your increased wealth, if everything is going well. There are also often life-changing events that happen in the course of life that could have a serious impact on your finances and your estate planning outlook. Those can include a divorce and/or a marriage, the birth of a child or grandchild, or it can include the deaths of people who may be an important part of your plan, such as executors or guardians and the like.
Between constant changes in estate tax laws to life changes, business owners have to keep their estate plans up to date. And those 30 percent who haven't yet started one have to stop procrastinating, and see an estate planning attorney as soon as possible to get everything started.
