Estate Planning Trusts for Family Business Estate PlanningBy James Blake on
How will the ownership, management, and control of your family business be handled if you become disabled or die? Many family business owners are so consumed with the day-to-day aspects of running a business that they neglect important estate planning procedures that can save their loved ones, their estate, and their business from headache and expense. As a result, as much as 70% of family owned businesses do not survive from one generation to the next. Some business owners may already have a last will and testament, but in many cases, a last will and testament may not be the ideal solution for passing a family business on to others. Many such businesses could benefit by establishing a trust to hold a business owner’s interest in a company and ensure a smooth transition with lower estate taxes.
Tax Advantages of a Trust
One of the prime advantages of placing your company or your ownership interest of a family business into a trust is that the trust assets will not go into your estate when you die. With the proper estate planning, you could avoid estate taxes that would have been due if those assets are part of your estate. Similarly, life insurance policies bought by the trust will not go into your estate if you have the right estate planning, and will not be subject to estate taxes, whereas insurance proceeds in your estate that exceed the exemption amount will be subject to estate tax.
Control Over a Trust
Another advantage to a trust is that it allows you to remain in control of the trust and the assets or family business it holds. Meanwhile, if you become incapacitated or die, there will be a smooth and immediate transfer of control to new trustee(s) that you pre-appoint in the trust. As the grantor (creator) of the trust, you have the ability to draft the rules or provisions that you would like to be followed in the management of the trust, the family business, and its assets, and any future trustees will generally be required to carry out your instructions. Thus, your vision for your family business and the benefits that will flow to your loved ones can be given great security.
A trust is a powerful estate planning tool that is useful for high-net individuals , family business owners, and for all types of business owners in general. The Blake Law Firm frequently advises business owners and individuals in the area of wills, trusts, and estate planning to develop strategies that work for their needs. Contact the office today to learn more about how you can structure security and tax savings into your estate plan.