Estate planning is essential for Michigan business owners as it helps ensure the smooth transition of business assets, minimizes tax liabilities and protects personal and business interests. Without proper planning, a business owner’s death or incapacity can create uncertainty and disruptions that affect the business’s and its stakeholders’ future.
Here, our Plymouth estate planning attorneys at Steslicki & Ghannam, PLC discuss the vital considerations Michigan business owners should consider when developing a strategy.
Succession Planning
Business owners should establish a clear plan for who will take over the business upon death or incapacity. This can include designating a family member or key employee or selling the company. A detailed business succession plan ensures operations continue smoothly and according to the owner’s wishes.
Trusts for Business Assets
Placing the business in a revocable living trust can allow for the seamless transfer of ownership while avoiding probate. Trusts can also provide tax advantages and protect the business from potential disputes. A trust can hold the business as an asset and designate how it will be managed or transferred to heirs.
Minimizing Estate Taxes
Michigan doesn’t impose an estate tax, but federal estate taxes may still apply. A properly structured estate plan can help reduce tax liabilities by utilizing lifetime gifting, irrevocable trusts, or family-limited partnerships.
Buy-Sell Agreements
If the business has multiple owners or partners, a buy-sell agreement can specify how ownership interests will be transferred upon the death or incapacity of one owner. This legally binding agreement outlines who can buy the departing owner’s share and at what price, providing financial security and clarity for the remaining owners and the family.
Incapacity Planning
Estate planning should also address potential incapacitation by creating powers of attorney for personal and business decisions. A durable power of attorney for business operations ensures that someone you trust will handle the company if you cannot manage it.
Life Insurance for Business Continuity
Life insurance can play a critical role in estate planning for business owners. The proceeds can provide liquidity to pay off debts and taxes or buy out business partners, ensuring that the company continues to operate without financial strain after the owner’s death.
Review and Update the Plan Regularly
Estate planning for business owners should be reviewed regularly, particularly after significant life events such as marriage, divorce, the birth of children, or substantial changes in the business. Laws and regulations can change, too, so keeping the estate plan current ensures it remains effective and relevant. We can help.
Contact our Skilled attorneys today at Steslicki & Ghannam
Contact our dedicated Plymouth estate planning attorneys today for guidance on effectively implementing plans for your and your business’s future so you can protect the company you’ve worked so hard to build.
