Business is booming in Clarksville, Tennessee. This growth is exemplified by the city’s recent acclimation by Money Magazine as the best place to live in the United States. Part of the reason for this honor is due to our thriving small and family-owned businesses. As the population of Montgomery County is anticipated to grow rapidly in the coming years, small businesses are set to grow with it. There is no better time to start a small business in Clarksville.
While there may seem like there’s no end in sight to how far our city can grow, your business could face an untimely end should something happen to you. Have you considered what would happen to your business if you as the business owner were to die? Could your business continue to reap the benefits of Clarksville’s continued prosperity? Would your family?
If you are a small business owner, you may want to consider estate planning as part of securing your business. Unforeseen events such as incapacity and death happen more often that we care to think about. Take a moment and consider the end game: What do you want to happen to your business in case you are not around?
Here is an overview of why incorporating your business into your estate plan is so important:.
Why is estate planning in Clarksville, TN important for small businesses?
If you are planning a business, already have a small business, or share ownership of a business in Clarksville, chances are you see your company as part of your legacy. If you and/or your partners want to make sure your business remains successful after an untimely death, then it is important to plan accordingly. To accomplish this goal, you need a sound estate plan that includes a plan for the business in case of your demise.
What could happen without estate planning? Many things. But here are arguably the worst two possibilities:
- the business could get shut down; or
- the business could get into the hands of unwanted persons.
How could this happen? Without an estate plan for your business, the transition period can get messy. Family members and other interested parties could fight for what they think is rightfully theirs. Plus, there are taxes as well as possible creditors and debt to contend with. These issues can become quite expensive, to the point the company goes bankrupt or must be sold.
How can an estate plan benefit your Tennessee business?
If you have an estate plan, then your successors and/or heirs will possess a roadmap to keep the business going. This roadmap is critical because it sets forth a plan as to who will be controlling the business and how it will be run. An estate planning attorney in Clarksville will be able to better assist you in establishing a plan to address those decisions.
Planning for Death Taxes
One of the most important aspects of planning for a small business is death taxes. If your business is successful, its possible you might have a death tax problem on your hand. These death taxes can eat up as much of 40 percent of your taxable estate. To pay this tax, sometimes the business must be sold. But you can plan to have your successors or heirs employ Section 303 or Section 6166 of the U.S. Code to alleviate this tax burden.
Agreements to Buy or Sell
Buy-sell agreements are contracts that allow you to establish a sale price and your share of the business. You can also direct whether you want certain business partners to have a right to buy your interest before it is passed to your heirs. You can even block certain persons from partaking in the business if you do not trust their judgment or competency.
Life Insurance
If you have partners in your business, you may plan for each of you to take out life insurance and include each other as beneficiaries. If one of you dies, then the life insurance can be used to fund the purchase the decedent’s share of the business.
Other Considerations
There are many other key points to consider as well. For example, if you have a sole proprietorship instead of an LLC or corporation, then your personal assets could be used to pay for your business debt. That’s money your heirs do not receive. Additionally, if you are a family owned business, then you may want to consider who can and cannot take part in the business and how exactly assets will be distributed among your heirs.
The Key Takeaway
Proper estate planning when you have a business is the only way to ensure your business and your heirs are taken care of as you intend it to be. Absent planning, much can go wrong. Seek the help of an experienced estate planning and business attorney today to make sure you and your business are well protected.