Estate Planning


DSC_0018 (2)You’ve worked hard to establish your business and build a secure future for your family. Your business is likely the most valuable asset in your estate. The many issues involved in passing on this asset can be resolved with an effective estate plan. Unfortunately, many statistics show that family-owned businesses don’t survive the first generation. Consider developing an estate plan that will allow you to protect your assets and make sure you control how they will be distributed.


There are three general concerns that all business owners should take into account when they develop their estate plan:


Who will take over the business when you die? It’s important to develop a succession plan that controls taxes on the new management and makes sure they are ready to take over.

Who should inherit your business? This may not be an asset you want to split equally among your children. Do those active in the business deserve a greater share? Will those not active see any value from the business? Or, maybe all your children deserve an equal share of the business. Now is the time to make this decision.

How will the IRS value your company? Since family owned businesses are not publicly traded, you need the help of a professional business valuator to determine the exact value of the company. Without this, the value of the business for estate tax purposes is often determined only after a long battle with the IRS. Planning ahead will help ensure your estate has enough liquidity to pay estate taxes and provide support for your heirs.



Here are just a few strategies that can help business owners protect their assets and develop a strong estate plan.


Buy-Sell Agreement – This agreement spells out in detail how the business will be dispersed among surviving partners or family members as well as indicating a dollar value for the business. A well-drafted agreement can solve several estate planning problems and can help ensure survival of the business.

Gifting the Family Business – The key to controlling estate taxes is to limit the amount of increase in the value of your estate over the years. One way to do this is to give assets to family members today so when the assets increase in value the increase is not part of your estate. There are some pitfalls, however, and you should work closely with your financial professionals – attorney, accountant, insurance representative – to make sure this is a viable option.



“The best recommendation I can give you about developing an effective estate plan is to start now,” says Chris Lewis, Financial Representative of the Principal Financial Group®. “It’s important that you involve all your advisors to make sure every aspect of the plan is well-executed and funded and that all important estate tax issues are covered and work to your advantage.” For more information, contact your advisors or call Chris Lewis at Office (205) 444.5597, Toll Free 800.253.7989 Ext 597, Cell 205.276.6115 or Email [email protected] .



BB11021 | 7/2008  |  #6526072010