The planning for the transfer or liquidation of your business at retirement or death is just as important as the planning you did when you started your business. Here are some tips from an experienced business attorney on how you can use estate planning strategies to transfer your business interests:
Business Structure – The type of business entity you have – a partnership, a sole proprietorship, an LLC, a C-Corp or an S-Corp – can have a sizeable impact on your estate taxes. It may be worth your while to change the organizational structure of your business now. If you want to preserve your business for future generations, a family limited partnership can allow you to transfer ownership of the business to your family members as limited partners and enable you to maintain control over the business.
Trusts – Business owners can use trusts to take the value of the business out of their taxable estates and pass business interests on to the next generation while maintaining some control over the assets.
Buy-Sell Agreements – If you plan to transfer your business to one or more partners upon your retirement or death, a buy-sell agreement is a must. The agreement can specify that the sale proceeds get transferred to a trust for your beneficiaries, which keeps the value of your business out of your taxable estate, so your heirs will not be hit with a hefty estate tax bill.
Estate planning for businesses can be intricate, so small business owners should consult with an experienced business attorney to ensure the right strategies are put in place for your particular situation.
If you’re a small or mid-size business owner, call us at (612) 206-3701 or fill out our contact form today to schedule a business consultation session.
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