Nobody in New York or elsewhere likes to think about death. However, if you want your wishes honored after you die, you must create an estate plan. This process can be even more difficult for business owners. In this case, setting up a business trust may be the best option for avoiding probate.
Estate planning for business owners
Business owners, especially sole proprietors, should consider estate planning early. There is no shortage of businesses that were destroyed through the probate process after the business owner died. Real estate planning is essential if you want to pass on your legacy properly. Elements of your plan can include things like:
- creating a succession plan
- purchasing life insurance
- purchasing “key person” insurance for businesses
- drafting a will
- creating a financial power of attorney document
- creating a medical power of attorney document
- planning for estate taxes
- setting up a business trust
The importance of a business trust
Of these steps, setting up a business trust is certainly one you should consider. Like all trusts, setting up a business trust requires choosing beneficiaries. However, more complexity is involved when a business is placed into a trust. The process must be approached carefully both to ensure the business adheres to business law and is run properly while in the trust before it is moved onto your beneficiaries. Overall, the key benefits to starting such a trust include:
- avoiding the probate process
- reducing or eliminating estate taxes
- ensuring continuity
- separating business assets from personal assets in the estate
- protection of business assets from creditors
If you are worried about the continuation and protection of your business after your death, placing it into a trust can help accomplish that goal. Certainly, consider this as part of your estate planning to ensure your business is run by who you want after your death instead of leaving that decision up to a probate court.