Estate and Asset Protection Tips for Small Business Owners

 Posted on November 26, 2024 in Asset Protection & Wealth Preservation

As a business owner, you are busy wearing many hats, from running the day-to-day operations to managing employees to growing the business. That is why you might not have taken the time to consider putting in place an estate plan to protect your assets. However, planning ahead as a business owner can safeguard and strengthen your business. If you want to know more about implementing an estate plan and asset protection strategy as a business owner, a qualified estate planning attorney can provide legal advice on how to best protect your assets.

Why Do Small Businesses Need Asset Protection?

The purpose of putting in place an estate plan is to ensure that your business assets are protected from any eventuality and that all the hard work, dedication, and money that you invested into building your business does not go to waste. A comprehensive estate plan can guarantee that someone you trust takes over your business if you are incapacitated and unable to do so. It can also protect your assets in the event you face:

• Business debts

• Litigation

• Divorce

• Tax liabilities

Asset Protection Strategies 

Ensure Assets Do Not Go Through Probate

One common goal of estate planning is to ensure that assets do not have to go through probate, which can be an expensive and drawn-out process. Illinois law requires that the estate of a person who owns more than a certain amount in assets go through probate. However, there are estate planning strategies to probate, such as putting your assets and ownership interest in your business into a revocable living trust.

Set Up a Succession Plan

With a succession plan, you can ensure that your business continues operating or preparing for sale after you are gone. A succession plan is a written document that outlines information about your business, your target market, and the competition. Similar to a business plan, it outlines a proposed organizational structure and the financial state of the business. Unlike a business plan, it details who will assume management positions upon your death or incapacity.

Put in Place a Buy-Sell Agreement

If your business has multiple owners, drafting a buy-sell agreement should be part of your estate plan. The goal of the agreement is to ensure the business continues to be owned and run by the remaining partners in the event of your death or incapacitation. It usually grants existing owners first rights to buy your shares.

Set Up a Tax Strategy

To protect your business assets, you can implement elements of an estate plan specifically tailored to minimize the taxes business owners face. For example, you can transfer your business shares into a special irrevocable trust called the Grantor Retained Annuity Trust (GRAT), which allows you to avoid taxation on an increase in the value of your business while continuing to receive income during your lifetime.  

Contact a Naperville, IL Estate Planning Lawyer

As a business owner, you want to ensure your assets are protected. A Yorkville, IL estate planning attorney understands the complex legal financial issues involved in estate planning for business owners. Our experienced attorney can prepare a multifaceted estate plan to protect your business assets from any threats. Contact Gateville Law Firm at 630-780-1034 for a confidential consultation.