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Plan Your Legacy: Five Reasons Business Owners Need Estate Plans
Dec 01, 2020

Business owners are notorious for engrossing themselves in the day-to-day management and functions of their businesses.  As a business owner, you are likely the heart and soul of your company.  Your clients trust you, and you have built unique relationships with other parties such as: accountants; attorneys; contractors; and suppliers.

Suppose, however, that tragedy strikes: You, as the business owner, are in a car accident and are severely injured or killed, leaving you unable to make decisions or care for yourself and your family.  What will happen to your business in such a situation?  Circumstances like this can happen to anyone at any time.  Consequently, business owners must proactively

develop robust estate plans.  Here are five reasons why business owners need an estate plan:

1. To ensure the continuity of your business.  When there is no estate plan in place for a business owner, there is no plan for addressing how the business will continue without its key employee.  In many instances, the business owner’s company is a primary source of income for the owner’s family.  The absence of that income could be devastating for the individuals dependent upon the business.  The impact could be far-reaching, as the business may also have employees who rely on its continuity.  Without an estate plan and proper business planning documents, there is no clear indication as to whether the company should continue to operate, and if it does continue to operate, how it should function.  Create an estate plan so that you, your family members, your employees, and your clients will not be severely impacted by the disruption that is likely to occur in your absence.


2. To protect the wealth you have created.  A business owner’s endeavors are often extremely lucrative, resulting in significant wealth creation.  If there is little to no estate planning in place, that wealth is exposed and becomes vulnerable to creditors and predators.  If the business owner dies and leaves a simple will or, even worse, no will at all, the owner’s money and property will have to go through a probate court process.  During the probate process, a decedent’s will or intestacy laws decide how the deceased’s assets should be divided and distributed.  Probate is a public process that is reflected in court records that are accessible to anyone.  This means that information about the money and property you own will become public information.

Additionally, without proper estate planning, what you have left to your loved ones could be exposed to creditors trying to satisfy debts or to predators interested in benefiting from the wealth you created.  For example, a disgruntled spouse of your child could attempt to take portions of your child’s inherited wealth in divorce proceedings.  A well-thought-out estate plan employs tools to protect against these situations.  While a will can record your decisions, legal documents that are not available to the public such as trusts, buy-sell agreements, and personal and company agreements are often more beneficial for business owners.


3. To avoid default state laws.  Particularly when it comes to limited liability companies (LLCs), there are default rules about what happens to a business in the event of a business owner’s death or incapacity that may not align with your goals.  For example, under some states’ statutes, an LLC must be dissolved when the last surviving member of the LLC passes away.  Some state laws allow a business owner’s economic rights to pass to the owner’s family members without management or decision-making authority.  If a business owner does not want surviving family members to be hamstrung in this way, the owner can leave instructions for handling these situations in the owner’s estate and business planning documents. 


4. To minimize estate and gift taxes.  You may be subject to substantial estate and gift taxes if your business endeavors have produced a significant amount of wealth.  Without a proper estate plan, your family members could lose out on a substantial portion of your wealth to satisfy these taxes.  Business owners who have put a carefully considered estate plan into place can avoid this.  The tax-saving strategies you employ will help you leave your wealth to the people you love without subjecting them to a significant tax burden.


5. To provide guidance and establish your legacy.  Arguably the most important reason to complete your estate plan is to firmly establish your legacy for your loved ones by leaving guidance about how to run your business.  For years, you built your business and guided your team by providing insight and inspiration.  That guidance is what makes the real difference.  The process of creating your estate plan can help you answer the following questions:

  • What are the core principles and values that drive you?
  • What is the business's mission?
  •  Who will lead the charge next?
  • What will happen to your clients?
  • What will happen to your employees?
  • Can the business be bought out? 

Jim Collins, author of Good to Great, asserts that “core values are essential for enduring greatness.”  If you are a business owner who desires to leave an enduring legacy, you must have an estate plan put in place. 


If you would like to create an estate plan, Jayde Law is here to help.  We enjoy helping our clients create estate plans that protect the people they love and the legacy they have created.  Give us a call today to schedule an appointment, to learn about our process, and to receive answers to any questions you may have.

Estate Planning: An Overview

15 Feb, 2023
Estate planning entails preparing your affairs for the future, including death and other life events. While older adults might give more thought to estate planning, it is an essential tool at any age. WHY IT’S IMPORTANT With estate planning, individuals and families can protect their interests during incapacity or after death. You can provide for a spouse, children, and dependent family members when you pass away. You can arrange your care and financial affairs should you suffer a severe accident or illness that renders you incapacitated. If you are a parent, you can appoint a guardian to care for and manage the inheritance of your minor children. If you own a business, you can prepare to transfer it to family members, colleagues, or other trusted individuals. You can make arrangements for your long-term care when you can no longer live on your own. You can also make funeral preparations, determine what happens to your body when you pass, and prepay for your funeral, all of which can help lessen the burden on your family members. WHAT IS AN ESTATE? Legacy planning entails passing on your estate. Your estate is everything you own, including: Savings and checking accounts Retirement accounts Investments Life insurance Annuities Houses and other real estate Cars Personal possessions, such as jewelry, furniture, and sentimental items When you die, your estate encompasses all your property upon death. If you sold or gave away property before death, it is no longer part of your estate, and you cannot transfer it upon death. Items you own with another person are also part of your estate. Depending on the type of asset, it might automatically pass to the other owner. For instance, if you own a home with your spouse as tenants by the entirety, it will pass to your spouse upon your death. WHAT IS AN ESTATE PLAN? An estate plan consists of legal documents and arrangements that determine the distribution of your assets when you die or outline your care if you become incapacitated. While a will can be a central component of an estate plan, a solid plan encompasses more than a will. It can also include legal tools that allow assets to pass outside of a will and probate (the process by which a court oversees the distribution of assets in a will). ESTATE PLANNING TOOLS In addition to your will, your estate plan could include the following: Purchasing jointly owned property or adding a joint owner to your property Designating a beneficiary on a pay-on-death bank account, retirement account, or annuity Buying life insurance to benefit your family should you pass away Creating a trust for a child Obtaining long-term care insurance to cover future nursing home or assisted living fees Executing power of attorney documents, naming health care and financial agents Making a living will, providing instructions for care should you become incapacitated Preparing a transfer on death instrument to pass ownership of your property to a beneficiary upon death WHAT IS AN ESTATE PLANNER? As professionals helping people make future arrangements, estate planners are attorneys who focus on end-of-life preparations. Estate planning attorneys assist people with drafting legal documents and understanding laws and taxes that could affect them and the loved ones they will leave behind. When creating estate plans, individuals may need to consult attorneys as well as other experts, including financial planners, accountants, life insurance advisors, bankers, and real estate brokers. WHAT DOES THE FINAL DISTRIBUTION OF ASSETS INVOLVE? The final distribution of assets is a conclusory step in the probate process before the court closes probate. When an estate goes through probate, the personal representative or executor must satisfy all debts, and the court must resolve all disputes before allowing the beneficiaries to receive the assets. At the end of the probate process, ownership of the assets of the estate is transferred to the beneficiaries. DO I NEED A LAWYER FOR ESTATE PLANNING? Although the law does not require that individuals secure legal representation to make estate plans, many find the support and guidance of estate planning attorneys invaluable. An estate planning attorney can help you identify the legal tools and strategies that suit your needs, as well as draft the necessary documents, such as wills, trusts, and powers of attorney. In addition to addressing tax concerns and drafting documents, these attorneys can help you avoid probate. Probate, the process by which the court oversees the distribution of assets in a will, can be expensive and time-consuming for surviving family members. It also opens the door for disgruntled people to challenge the validity of the testamentary document, further complicating asset distribution. An estate planning attorney could help you organize your assets to transfer outside of probate to make the transfers simpler, easier, and less vulnerable to challenges. When you are ready to create an estate plan, contact Jayde Law PLLC.

Three Things to Know About Being an Executor

01 Feb, 2023
An executor (or personal representative) is a person or entity you choose to carry out your last wishes outlined in your will. Your executor should be someone you trust is responsible enough to manage your estate after you pass away. Choosing an executor is a big decision when it comes to estate planning. So, what should you know about an executor? What should you consider before naming an executor? Here are answers to three common questions about executors. Can an Executor Decide Who Gets What? No. In most circumstances, an executor cannot decide who gets what property. Executors are responsible for carrying out the decedent’s wishes as outlined in the will. However, if the decedent did not distribute all their assets in their will, in some circumstances, the executor may be able to decide how to distribute the unassigned property. Can an Executor of a Will Be a Beneficiary? Yes. An executor can also be a beneficiary of the will. It is common for people to have their surviving spouse or children act as the executor of their estate. This choice can be cost-effective if you have a small or simple estate. Another benefit of having a family member act as the executor of your estate is they are familiar with your wishes. They know you, and they understand how you want your assets divided. If you forget to state where property goes in your will, an executor that knows you well is more likely to give those assets to the correct beneficiaries. How Long Does the Executor Have to Pay the Beneficiaries? The short answer is: It depends. The executor should work diligently to get each beneficiary paid as soon as possible. While the executor is responsible for ensuring beneficiaries receive the money or property they were left in the will, the probate process may delay beneficiaries from receiving a payout. Depending on the size of the estate and the debts and taxes the estate owes, it may take anywhere from six months to more than one year for a beneficiary to receive an inheritance. The probate process varies depending on the state, but the typical process goes like this: Submit the Will for Probate — Part of the executor’s responsibility to the estate is to file the will with the probate court. Filing the will begins the probate process. Once completed, the beneficiaries are one step closer to receiving their inheritance. The time executors have to file a will with the probate court varies by state. File an Inventory — An inventory of estate assets is required. As part of an inventory, the executor determines the total value of all estate property, money, and other assets. A completed inventory can then be used by the executor to determine whether federal or state taxes apply, or whether assets will be used to settle debts. Pay Taxes and Debts — Before the executor can distribute any assets to beneficiaries, estate debts and taxes must be paid. The executor is responsible for ensuring these payments are made. Creating a complete estate plan can be overwhelming. With the help of an experienced estate planning attorney, you can ease some of the anxieties you may be facing in thinking about estate planning. If you are ready to start the estate planning process give Jayde Law PLLC a call..
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