For some Washington, DC, residents, their primary asset is not the family home, but the family business. In order to ensure the survival of the business -- or at least its liquid value -- estate planning needs to be done. Without it, when the owner of the business dies, all of its assets could be depleted, leaving heirs with nothing to inherit.
Several issues need to be taken into consideration when constructing a business-friendly estate plan. First, as the population of the country ages, the number of people becoming incapacitated is on the rise. Many estate plans include powers of attorney for health and finances in this event. A power of attorney can also be executed, which would allow a trusted agent to make business and financial decisions on behalf of the company.
In the event the business owner dies, a plan needs to be in place for the smooth transition from the now deceased owner to another person or persons if the company is to remain intact. Insurance policies can be added to an estate plan to cover any expenses that incurred in the transition or dissolution of the business. Trusts could also be useful in either case. Numerous options exist. It is only a matter of finding one that best suits the family and the company's needs.
Estate planning is not only about reducing or eliminating taxes. In fact, many Washington, DC, residents do not need to worry about owing federal estate tax -- even if they own a business. Therefore, the focus of the estate plan can shift to preserving the family business and making sure that heirs and beneficiaries are taken care of in accordance with the individual's wishes.
Source: Forbes, "Worry About Your Estate Plan, Not The Taxes", Steve Parrish, July 1, 2014