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Caring For Generations

For Business Owners, Estate Planning Becomes Shades More Complex

by | Jun 19, 2024 | Business Law, business planning

For every Geyer Law estate planning client, the process of making decisions about the future along with plans for leaving a legacy combines soul-searching and practical execution. For business owners and their families, both those elements of estate planning become a lot more complex.

  • Do the owners want to sell the business (either now or at a future date) to outsiders?
  • Do the owners want to remain at least partially involved in running the business for a period of years?
  • Do they plan to have one or more of their children succeed them in owning the company?
  • Are there other children who have not been and do not wish to be business owners?
  • Is there an employee (or more than one) who might want to take over the business?
  • Are the owners seeking a one-time payment or an income stream phased over several years?

“For business owners, estate and exit planning join forces”, Tom Kennedy CFP® observed in Part of the reason the overlap of estate planning and exit planning creates such a variety of issues that must be considered is that there are so many different parties who stand to be affected by the ownership change, including not only the present and future owners of the business, but also the employees, the customers, and even the community, Kennedy observes. What’s more, the transfer of ownership needs to be “structured to minimize tax implications and potential disputes among heirs.”

Because our estate planning work involves various strategies to minimize estate, gift, income and capital gains taxes, we often work together with clients’ tax and accounting advisors, exploring uses of trusts and family limited partnerships, as well as with life insurance professionals to safeguard the wealth the business owners who wish to preserve for their own future financial security.

“Letting an operating business drift equally into the hands of a group of siblings is often a huge mistake, with sad stories that develop after the founder is not around to see them,” Hank Harris of cautions. “So, when it comes to your business, don’t treat your children equally – treat them equitably,” he advises..

The team at Rebecca W. Geyer & Associates has helped Indiana businesses start off on the right foot since 1999, helping new business owners avoid costly mistakes. Decades later, many of our business owner clients are facing decisions at the other end of the process – including their business interests in their plans for their own remaining years and for the generation to come.

– by Kristina Shover, Associate Attorney with Rebecca W. Geyer & Associates