Business owners residing in Texas will find estate planning to be a wise and useful process to engage in to protect against the negative impact of unexpected circumstances. Proper estate planning can assure the continuation of the business or a dissolution that follows the deceased owner’s wishes. Thus, estate planning conducted with the assistance of experienced estate planning legal counsel can avoid unwanted results for the business.
One important consideration is the option of employing a buy-sell agreement. If there are partners in the business, the buy-sell agreement sets up a formula and procedure for the partners to purchase the decedent’s interest. The sale proceeds would normally go into the decedent’s estate and be distributed to heirs through the decedent’s will.
The buy-sell agreement protects the business from a chaotic result that could exist with no provisions regarding the disposition of the company after death. Many people who build up a business, whether with partners or not, do not want to see the business destroyed on their death. Call it a matter of legacy, but many business owners are proud of their accomplishments and would like to see them extended, perpetually if possible. Estate planning can allow for proper growth and continuity of the business in the manner desired.
There are also tax savings that can be realized with good estate planning. One vehicle used by planners is a grantor retained annuity trust, which is designed to give the owner a flow of income and then provide for the appropriate distribution of the business ownership to one’s heirs after death. The potential of overwhelming taxes can be avoided with such measures. Thus, the bottom line is that good estate planning by a Texas resident and business owner will assure that one’s business is preserved and kept running in the desired way that the owner envisions.
Source: The Huffington Post, “5 Things Estate Planning Can Do for You and Your Business“, Kc Agu, March 31, 2016