Business Planning is just Different from Estate Planning

Business Planning versus Estate Planning

We do a lot of business succession planning for our clients.  Those clients go through a nice, long process of determining who gets their business, when they get to run the business and then communicating those decisions to other interested persons.

For our Estate Planning clients, we deal a lot with estate tax planning, as well as making sure that our Leawood clients avoid probate.  We just assume that these processes are different.  The article below kind of dispels that notion (and we should know better).

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Leawood estate planning attorneys

http://columbustelegram.com/news/local/estate-planning-and-business-transition-quite-different/article_5669ffe9-e90b-5016-acf3-abb3be144d34.html

Estate planning and business transition quite different

Business and asset owners (including farming operations), at some point in their career lives, must ask the eternal question, “What happens when I’m gone?” Answering this question is critical to understanding and planning for the disposition of assets both before and after death.

Two things are discussed often. One is estate planning, and the other is businesses transition. Many times these two processes are thought to be the same. Actually, they are very different.

Estate planning involves the transfer of wealth and assets of an individual, both personal and business related, from one person to another person or entity. It is important to note that estate planning does not need to pass assets to an individual. In some cases, business asset (tangible and intangible) ownership is transferred to a legal entity, such as a corporation, limited liability company, or a trust.

The myth that only old people or rich people need to have an estate plan is short-sighted. You never know when you might become incapacitated or suffer a premature death.

We avoid discussing estate planning because it forces us to consider our own mortality, greatly postponing the process. Even for the young, who might not have acquired much wealth, the planning process considers the disposition of assets and interest they might not know exist, such as being an insurance beneficiary to a living parent, or intended guardians for young children.

If you have anything of value and an intention for the passage of that asset or interest after your death, you need an estate plan.

Business transition involves the transfer of a business asset or entity from an existing owner seeking to exit, to new ownership. The new owner need not be younger than the existing owner to qualify as a business transfer.

Typically, the transfer of a business occurs during the life of the existing owner. When the transfer of a business occurs post-mortem, it typically occurs through an existing or implied estate plan or asset transfer process. The process of business transfer is often dynamic, involving multiple steps, depending on the wishes of the existing owner.

It is possible that the investment and asset transfer can take a short period, or a very long period, depending on the valuation of the business and the resources of the transferee. The transfer of the tangible and intangible assets can take place through cash purchase of individual items, purchase of share interest, and/or purchase of stock or certificates.

There are a number of similarities between estate plans and transition plans; however, the greatest difference is timing of the transfer. Estate plans consider the transfer of tangible and intangible assets and interests beyond the life of the owner, while the business transfer plan considers transfers during the life of the owner. Neither functions in a vacuum, nor is intended to be a replacement for the other. Instead, they work together, often in tandem, to fulfill the wishes of the business owner.

Estate Planning Lawyers in Leawood

Estate Planning is really about peace of mind. What estate planning is all about is discovering the right tools to execute your basic requirements. What that really means is that we utilize the most advanced legal documents to correctly implement your desires. We personalize each and every plan so that you get exactly what you want. We do this using the most up to date devices so that we can prepare a personalized plan at the lowest possible cost. Kindly call us today with any concerns.

The Eastman Law Firm is an estate planning law practice. We focus on estate planning so that you can be ensured that you are getting the most up to date techniques.

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