An estate planning lawyer at Mark S. Eghrari & Associates PLLC can provide help to the owners of companies who want to ensure they are making smart choices about what should happen to their businesses when they are no longer able to run them. Most people want their company to survive them, and handing the business down to kids is often the preferred option. But, simply transferring your business to your children may not be as easy as it seems on the surface.
Mark S. Eghrari & Associates PLLC will work with you to ensure that your company can serve as your legacy and can survive long after you are gone. Many businesses do not continue to thrive when the original owner must leave for a wide variety of reasons, and our legal team can help you to address some of the most common problems that can occur as your company passes to new owners. To find out more about the best ways to pass your business down to your children, reach out to an estate planning lawyer today.
How Can a Business be Passed on To Your Children?
When you are making plans to pass your company onto your children, either during your lifetime or after you pass away, there are some key challenges to overcome.
One issue that you’ll need to address is that transferring valuable assets during your lifetime could trigger a gift tax. But, if you wait until after you have passed on, you could trigger an estate tax.
In fact, if your business is valuable enough, you could end up with your ownership in the company causing your entire estate to be subject to taxation. Your estate must pay the taxes due, which could be a big problem if there are insufficient liquid assets in the estate to pay taxes after you pass on. Many business owners have the bulk of their money tied up in their companies, leaving too little available cash to pay for the large estate tax bill that is due. This can either lead to the sale of the business or its assets to cover taxes, or could result in heirs or beneficiaries having to take out loans so taxes can be paid and the business can stay in the family.
Another issue to address: The need for the timely transfer of business assets. A delay in the transfer of control over the business can occur in the event of the owner’s incapacity unless advanced plans have been made to ensure that new owners are able to take control right away. This could cause the business to lose value as operations suffer due to uncertainty over who is in charge. A similar problem could occur after the death of the business owner, if the owner is still in control upon his passing. The probate process can take a long time – around a year or so – and there could be a lot of uncertainty during this year-long period over how the business should operate.
You want to make certain that you have addressed these key issues in a business succession plan, and also taken steps to protect the value of the company from other sources of loss that could occur- such as a need to spend your assets on nursing home care as you get older. There are different techniques that you can use, such as the creation of a family limited partnership or the incorporation of the business and the transfer of ownership shares, either directly or into a trust. You should talk with an experienced attorney to find out the specific approach for transferring the ownership of your assets that would be best for your business organization.
Getting Help from An Estate Planning Lawyer
An estate planning lawyer at Mark S. Eghrari & Associates PLLC can offer insight into planning for business succession and can otherwise help you to leave the strong legacy that you wish to provide for your loved ones. To find out more about the ways in which we can assist you in passing your company onto your kids, join us for a free seminar. You can also give us a call at (631) 265-0599 or contact us online to get personalized advice with any of the issues that matter to you when it comes to protecting your assets and taking care of your children after you are gone.
You never know when something could happen to you, so don’t put your company or your children’s inheritance at risk. Give us a call today to make your personalized plans for the future.