Estate planning is often a neglected form of financial planning that can protect your family from uncertainty and confusion after you pass away—and for business owners, it's even more essential. Hiring a Los Angeles estate planning attorney can help you make smart, effective choices.
Here are the basics of estate planning for business owners and why it's so important.
What is Estate Planning?
Estate planning includes any form of financial planning for the future. However, it is mostly focused on what will happen to your assets after you pass away. These include all your belongings, from bank accounts to real estate.
Without an estate plan, all of your assets will be divided in probate court, which means that a judge will make all those important decisions. However well-meaning the court may be, its decisions probably won't fully align with your wishes.
Legal documents like wills and trusts allow you to set clear guidelines on what to do with your possessions. Estate lawyers specialize in helping their clients make plans that will hold up in court and allow their loved ones to get access to their inheritances as soon as possible.
Estate planning can also include plans for your medical care if you get seriously ill or incapacitated. Some people choose to make financial plans that will cover a stay in a nursing home or other care facility. If you aren't able to make decisions on your own, medical professionals will refer to your advance directives to decide what approach to take to your medical care.
This can include whether or not to use:
- CPR
- Ventilators
- Tube feeding
- Resuscitation
Power of Attorney
Another option is to add a power of attorney (POA) document. This grants an individual the right to handle your finances or medical care on your behalf. It goes into effect when you are incapacitated and unable to make decisions on your own.
Careful estate planning will ensure you get the desired outcome for all your assets. In addition, a good lawyer can also help you reduce estate taxes.
Why is Estate Planning Important for Business Owners?
Estate planning offers business owners the chance to decide who will inherit the business and all their other major assets. A complete estate plan will include plans for your loved ones, your company, and even yourself as you age.
When you have a solid plan for your finances, you can put your mind at ease and focus on what you do best, which is running your business.
Business Succession
As a business owner, you've likely thought about who will take over once you retire or pass away. Whether it's a family business or you have an employee in mind to take your place, it's important to make a legal record of your succession plan.
Some companies with multiple owners choose to create a buy-sell agreement. This means that if one owner dies, the other owners will automatically buy the rights to the business from them. The agreement is designed to prevent children and other family members from accidentally inheriting ownership.
When passing on your share of a business to beneficiaries, it's important to consider the tax implications. An estate attorney can help you minimize taxes and create a smooth transition for your business.
Medical Fees and Elder Care
The costs of medical care are constantly increasing, making it worth the time and effort to plan for what might happen if you need extended medical care. Those services can cost thousands of dollars a month, potentially draining your retirement account or savings.
Placing some of your assets in a trust fund can protect them from being used to pay your legal fees. Asset protection trusts are complex and need to be executed carefully. When done correctly, they allow you to keep the property and other significant assets within the family.
An elder law attorney in Los Angeles can provide insight into the best tactics you can use to plan for elder care. Together, you can make a financial plan to cover the cost if you ever need to be put into a nursing home or require at-home assistance.
How Can Business Owners Prepare an Estate Plan?
A will is a great place to start for anyone who wants to make an estate plan. Sure there are many templates available for free, but anyone with complex finances should consult a legal professional who can account for unique circumstances.
Small business owners can benefit immensely from personalized advice, especially if they have concerns about the estate tax. Every financial situation is different, and that's especially true for anyone who owns a business.
You can also leave important business-related assets to your business partners. If equipment or work vehicles are under your name, for example, it's important to add those to your will or trust so the company can continue operating as normal.
Tools like wills, trusts, and life insurance policies allow you to decide what happens to your money and belongings after you die. While you'll probably leave many of your assets to your spouse or other family members, writing out one gives you total control.
Most company owners are used to handling things on their own, from insurance to business strategy. However, estate planning is complex and requires help from a professional. Investing in legal services can benefit your family, business partners, and the company itself.
Finding the Right Attorney
As a business owner, you understand the importance of handling your finances carefully. Therefore, it is essential to find a Los Angeles estate planning attorney who has the skill and experience to help you protect your investments and ensure that you can pass them on to your family.
Business owners have unique financial and business-related needs that only a legal professional can handle. We are a premium law firm founded by a registered financial consultant and lawyer with decades of experience in estate law.
We will help you make smart financial decisions for all your assets. To schedule a consultation to learn what we can do for you, contact us at 562-526-6941 at McKenzie Legal & Financial today!
