Most folks know that estate planning is an essential component of long-term financial planning and they figure they have time to get around to addressing it. But if you are a business owner or have a professional practice, it is critical that you start your estate and business succession planning now.
Most business owners have a sizeable portion of their financial assets tied up in the family business. As the business provides your family’s source of income after your death, it is essential that you prepare for the future of your business, including how it will be transitioned to the next generation or sold to a third party. A business can continue to thrive beyond your involvement, providing that there is careful and continuous planning. By implementing successful estate planning strategies in the form of a business succession plan, you can minimize estate taxes, effectively distribute wealth, and realize your long-term financial objectives.
Estate plans provide protection against lawsuits, elder abuse, divorce, and other events. Proper estate planning enables the business owner to decide how business assets will be distributed, communicate any health care wishes, and leave a legacy to children and grandchildren.
New changes in the federal estate tax exemption level present opportunities to reap significant tax savings. With the federal threshold now at $11.2 million per person – nearly double the previous level of $5.49 million – business owners may now pass along $11.2 million to each beneficiary without paying any taxes. Only the amount that exceeds this threshold will be taxed. This exemption level is only in effect through 2025; in 2026, it reverts back to the $5 million per person threshold. So it is important to act now to take advantage of this tax savings opportunity.
Establishing a last will and testament is an important part of an overall estate plan as it enables business owners to designate who inherits the business. Without specifying in your estate plan how you would like your assets distributed, a probate judge will make that decision on your behalf, which may mean that your business is liquidated to pay off creditors.
When it comes to running your own business, there is no shortage of things to tend to. But successful business owners know that it is smart to focus your energy on what you do best and let someone else do the rest. So, leave the estate planning to us. At Altman & Associates, estate planning is all we do. In fact, we are recognized as the premier estate planning firm in the Maryland, Washington, D.C., and Northern Virginia area. To discuss how to maximize your business growth, schedule a confidential consultation with one of our estate planning specialists; contact us today at 301-468-3220 or online.