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Preparing for the unexpected when owning a business

On Behalf of | Aug 13, 2020 | Estate Planning |

It is never too early for Massachusetts business owners to begin the process of estate planning. There is always a risk of unexpectedly becoming incapacitated or suffering an early death. When this happens, it is generally harder on the asset holder’s family and friends when no provisions were made for those assets in advance. The same holds true for businesses.

Business owners should think about who should take over when they are no longer able to, assuming they want to pass along their companies. If individuals want their businesses sold or their interest in the organizations transferred, they should spell out how this should take place. All these details can be spelled out in a succession plan, which is a document within an estate plan.

Another document that can be created during estate planning is a power of attorney. This document is used to give another person legal decision-making authority over medical and financial decisions if the person granting the authority is mentally unable to make sound decisions.

Asset holders may also want to speak with an estate planning attorney about whether to set up a trust fund as a way to potentially protect their beneficiaries from paying excessive taxes. A grantor retained annuity trust allows trustors to minimize taxes for their beneficiaries while also getting income from the assets that are put in the trust.

Business owners can also retain key person insurance to try to ease any burden placed on someone who has to suddenly take over their companies. Key person insurance that names a business as a beneficiary can cover expenses for a business successor. An estate planning attorney may provide recommendations on other strategies business owners can use to protect their assets.

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