In the Kent area, there are many family business owners. These business owners are often very busy with the day-to-day operation of their business to even think about what will happen to the business after they pass. Estate planning for family business owners is very important in making sure the business is passed to their heirs, sold or whatever they would want to have happen.
There are many options for what can happen to a business when the owner dies or decides to retire. The business can be put up for sale, or the owner’s spouse or children can take over and continue the business. If the owner of a family business decides he wants to transfer it to another family member, there are many things that should be considered. Often, a transfer of the business is not successful for a number of factors, including the new owners now knowing how to run a business or not having enough cash to pay for the estate tax.
Business owners need to plan carefully how they will transfer their business. If they want to transfer it to one of their children, they should consider leaving an asset that is just as large to their other children. Another option would be that the children who are involved in the business receive complete control over the management of the business and the children who are not involved receive a share of the profits.
Moreover, if the business is more than 35 percent of the business owner’s estate, the estate may qualify for an estate tax deferral. The estate can elect to pay the taxes over several years. Business owners have many complicated matters, when it comes to their estate. A legal professional skilled in estate planning can help these families keep these businesses in the family and work out an arrangement that is fair to everyone.
Source: yourhoustonnews.com, “Estate planning for business owners,” July 3, 2015