Estate Planning for business

No matter how long you have been in business or how large or successful that venture may be, operating a business is always complicated.  Profitability, cashflow, tax, employees and legal requirements are just some of the many challenges a business owner deals with on a daily basis.  And the constant – the only business constant – is that things changes will come.

One aspect of having a business which is often overlooked is Estate planning.  No matter what your age, having a properly executed estate plan ensures that after your death your estate can be distributed according to your wishes.  This not only provides you with peace of mind, it also assists your family to deal efficiently with such a significant change.

The complexities of business should be taken into consideration with any estate plan.  Part of this is ensuring that the succession plan and the estate plan interact successfully to provide the desired outcome.

A succession plan is the road map for the transfer of a business at certain exit points, including death.  Whilst an estate plan looks at the distribution of your assets after your death with your Will being the primary document directing this.

For many, business assets may form a substantial part of their estate.  Therefore, how to transfer or realise this asset creates added complexity to the estate plan.  Some of the many factors to consider when establishing your estate plan include:

  • Business size, structure, complexity and value.
  • Who actually owns the assets? You may not actually own the business and some assets may not be governed by your Will.
  • Who will be deemed to be the right business successor and how will they fund? Are buy/sell agreements in place?
  • Children: their age, skills and future ambitions can impact on transferring the business to the next generation.
  • Tax implications may influence the outcome.
  • What are your other estate assets such as superannuation and life insurance?
  • Is estate equalisation an objective?
  • Who will perform the role of Executor – the person responsible for administering your estate.

Estate planning complexities increase for business owners.

However, the importance of a strong estate plan cannot be overstated. Professional advice is important to ensure that your estate planning wishes are addressed.

Accru can assist with your Estate Planning reach out to your local office today.

About the Author
Daniel Richards
Daniel is approachable and always willing to have a chat. With over 21 years experience advising small-to-medium businesses, he is able to communicate complex issues in an easy-to-understand way to his clients.
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