Business owners in Nevada may be aware of the importance of estate planning for their personal belongings and properties. However, estate planning can be just as important to protect the longevity and well-being of a business. When the principal of a business passes away, it can be too easy for an active concern to slide into inactivity.
Estate planning can help to ward off such concerns. An estate plan for the business can help to ensure a proper management transition after death. By preparing a new management team in advance, a business owner can be assured that their firm is in good hands. Another option for a business estate plan is a buy-sell agreement. When a business has several owners, this agreement allows the others to purchase the interest of the deceased party. It can prevent that portion of the business from automatically transferring to the general heirs of the deceased owner.
In addition, a proper plan can help to reduce taxes. Transferring business assets to one’s children through a grantor retained annuity trust, or GRAT, may ensure that an owner continues to maintain their own income. Despite the growth of the assets in the future, that appreciation will not be subject to extensive taxes. Other corporate forms, like a family limited liability company or a family limited partnership, can be used to hold the assets of a business and transfer them to successors.
A business estate plan is an essential part of future planning. It provides the vision for succession in the business, helps to avoid probate and sets out a clear plan for the future operation of the business. An estate planning attorney may work with a business owner to develop a full-scale succession plan, including establishing trusts, delegating authority to successors, bringing in outside directors and planning for ownership transfer.