Family-owned businesses play a huge part in our local and national economy. There are 5.5 million family-owned businesses in the United States. Family businesses employ over 98 million people and account for 58 percent of the United States’ gross domestic product (GDP). Family businesses also create 78 percent of new jobs. Indeed, many family-owned businesses have a long-term investment strategy, are committed to employees, and focus on benefiting their local communities.
Owners of family businesses understand how important it is that their businesses thrive after you’re no longer here. You work hard day in and day out to make sure that your Southeastern Massachusetts family business is profitable and that your employees are well treated. Here are a few tips for making sure that your family-owned business continues to thrive after you’re gone.
1. Make Sure Your Management Team Understands Your Succession of Estate Plan
When a beloved family member passes away, it can be difficult for successors to know what next steps to take. Start planning your business succession plan now. Depending on the size of your business, a succession plan could take time to develop. If you own a smaller family business, and you’d like them to sell the family business, take the time to choose someone to appoint to oversee the sale. If you’d like the business to continue, choose a person who will be in charge of running the company immediately after your passing.
2. Make Sure You Have Sufficient Liquid Assets
After a family-owned business owner passes away, the business may struggle to pay the bills. For example, when a husband and wife own a business, and the husband passes away, the wife may not have enough liquid capital to pay estate taxes, or to replace the husband’s earnings. Taking out a life insurance policy and placing it into an irrevocable trust can help successors pay bills quickly after a loved one’s death.
3. Engage in Tax Planning as Early as Possible
The payment of estate taxes can be daunting for surviving family members. A hefty tax bill puts financial stress on the surviving family business owners. With an effective estate plan, a profitable business with positive cash-flow could transfer wealth out of the owner’s estate and into a trust for his or her surviving family members. Placing assets into an irrevocable trust can help the family members who are beneficiaries to avoid paying significant estate taxes.
The last thing you want to happen is for your surviving family members to need to sell off business assets to pay your estate tax bill. Estate planning laws change frequently, and taking the time to discuss your plans with experienced lawyers can help you. You’ll rest more easily, knowing that your family will be able to continue operating your family business without having to sell the business itself or business assets to make ends meet.
Our Southeastern Massachusetts Law Firm Can Help You with Family Business Planning
Taking time to engage in estate planning can be difficult as a busy business owner, but it is essential. At Surprenant & Beneski, PC, we value the contribution family businesses make to our local community. Our skilled estate planning lawyers can help you make sure that your goals and wishes happen after you are no longer here.
We use our estate planning experience to ensure that your business thrives and that your family members who remain in the business have the tools they need to succeed. Contact our Southeastern Massachusetts law firm today to schedule your initial consultation and learn how we can help you make an effective estate plan for your business.