Nobody likes the thought of planning their estate. Estate planning forces you to confront your own mortality. It is not exactly the most pleasant financial planning task. But, it can also help your children and other family avoid a lot of heartache and confusion in an already trying time. If you are a business owner, whether you own a New York business or a company somewhere in Alaska, estate planning is even more essential. But, what is estate planning? Find out what planning your estate actually entails below.
What Is An Estate?
What does an estate include? An estate includes all the property and assets you own at the time of your death. This obviously includes all of your real estate, like your house and any commercial properties you own. It also includes bank accounts, stock holdings or other securities, life insurance policies and all your personal property, like clothing, artwork, jewelry, cars and more. Anything at all that you own is included in your estate. This should help you begin to answer your questions about estate planning.
How Do You Plan An Estate?
There are several tools available to help you plan your estate. You probably already know about wills. But, wills are not the only estate planning tools at your disposal. Trusts, beneficiary designations, powers of appointment, powers of attorney and advance directives are also essential tools that help you navigate the estate planning process. What is estate planning? Really, estate planning is just the process of getting all this paperwork in order, hopefully long before you will ever need it.
Who Creates An Estate Plan?
If you are creating an estate plan, you should make sure to do so with the help of an attorney and a tax advisor. An estate planning attorney will help you create the legal documents that help put your estate plan in place, like wills or health care proxies. An estate planning tax advisor will help you navigate the tricky estate laws, trust laws and similar tax loopholes. They will use strategic cost cutting tricks to help you save money in taxes for your children to maximize what you leave behind. Using estate planning services offered by tax accountants and attorneys will help you create an airtight estate plan that leaves no room for confusion after you die.
Optional But Optimal
There are also optional elements that you may choose to consider when planning your estate. This optional planning can help you make an effective estate plan that leaves nothing to question. You can choose to include instructions for passing down not only your valuables, but your values as well. This includes directives of a religious nature or simply guidance about the values that your family prioritizes, like resilience or hard work. You can also plan in such a way as to minimize taxes and unnecessary legal fees. For business owners like you, you will also need to include a plan for the transfer of your business upon retirement, disability or death. These are all optional elements to include when creating an estate plan.
Planning For Business
Creating a succession plan for business is perhaps the most important part of estate planning for family business owners. You have three choices when you are making a business succession plan. You can sell your business, create a buy-sell agreement or transfer business ownership through a living trust. These options all have their own unique advantages and disadvantages. You should do further research about these options with an estate planner. This way, you can make the best financial decision possible for the benefit of your business and your children. After all, that is the very purpose of creating an estate plan.
What is estate planning? For business owners, estate planning is an essential part of small business bookkeeping to have in order long before you need it. An estate plan will help distribute your assets to your family after you die. Estate plans help your surviving family avoid legal battles and family arguments. They also help protect your business. Now that you know what an estate plan is and how to go about creating an estate plan, you should get started as soon as possible. This way, you are prepared for anything that comes your way.
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