Can you believe that we’re already in June? 2021 is flying by and things appear to be looking up (at least, when compared to what happened in 2020—knock on wood). Now that half the year has passed, it is time to do a mid-year evaluation of your estate plan. This guide will provide a few simple questions for you to ask yourself when determining whether your estate plan covers everyone and everything it needs to cover. 

1. Do I have a will?
A will is a final statement of your intentions when it comes to your assets. It determines where your assets will go after you pass on, and it is a vital step in the estate planning process. Dying without a will leads to intestacy, which will force your family into a painful and unexpected court process. Having a will as a cornerstone of an estate plan is extremely important. 

2. Do I have a trust?
A trust is a three-party fiduciary relationship set up in a legal document. You, the donor, transfer title to a trustee, who holds the title until they are instructed to transfer title to the beneficiary. A trust is useful for someone who wants to and is able to pass on title to an asset immediately. A trust can also help you avoid probate court, which makes it an attractive option for many. 

3. Do I have beneficiary designations? 
There are a few possessions that can pass to heirs without you dictating them in the will (such as a 401[k]). Maintaining a beneficiary and contingent beneficiary—someone to take the account if the other beneficiary cannot—will allow the person you want to receive your assets without the court stepping in. Not naming a beneficiary to these assets means that a court will be left to decide the funds’ fate, and the court’s decision could run counter to your wishes. 

4. Do I have a letter of intent?
This one is easy to complete, but it’s still vital. The letter of intent is a document that you leave to your executor. It defines what you want done with a particular asset or assets after you die or get sick. The letter of intent can also provide details on your funeral. It will also make a statement of your intent, which can help if there are murky parts of your will. 

5. Do I have a healthcare power of attorney? 
A healthcare power of attorney (POA) makes decisions for you if you’re too sick to make them yourself. This trusted person—usually a spouse or family member—will step in on your behalf, ensuring your wishes are followed. Though you might feel fine now, anything can happen. 

6. Do I have a financial power of attorney? 
Similar to a healthcare power of attorney, a financial POA makes monetary decisions for you in the event that you’re too sick to make them yourself. Again, even if sickness doesn’t seem like it’s looming on the horizon for you, it’s best to be prepared, just in case. 

7. Is my business taken care of?
Some of us are business owners, and businesses must be included in estate plans as well. Having a succession plan and plan of action for your business after you die will keep your company from falling into disarray when you’re gone. 

8. Do I have guardianship designations?
Those with minor kids should have guardianship designations, in the event that something happens to them and their spouse. Make sure to talk to your proposed guardian before you make the decision, as you want to ensure the guardian is on board before potentially saddling them with a huge responsibility.

9. Have I acquired any new major assets? 
Estate plans change, and sometimes those changes are due to new assets that need to be incorporated into the plan. If you’ve acquired something major, you’ll need to include it in your estate plan, sooner than later. 

10. Has anything major changed in my life? 
This update applies to pretty much any major event in your life. If there are new births, deaths, or weddings, they need to be reflected in your estate plan. 

These brief questions will put you on the right path to ensuring that your estate plan covers what it should cover. Visit our website to learn more and contact an estate planning attorney. 

Time is flying by in 2021, and is that really such a bad thing? If you’re a small business owner, you know that the past year-and-a-half has been difficult. Though there are government programs that have helped keep small businesses afloat, things are not completely back to normal. 

Luckily, there are various legal ways you can protect your business assets, even in these troubled times. Use this guide as a reflection tool. It’s almost mid-year—how are things looking for your business? What steps have you taken to protect what you have built? 

What the Surveys Are Saying

Bill.com conducted a survey of small business owners, asking them about their forecast for 2021. The survey found that, while a majority of SBOs are optimistic, they are also making changes in how they run their businesses. 75% are introducing new products and methods of conducting business as we enter the second year of COVID-19. 

New innovation is a necessity for an SBO. However, it is, obviously, not the only necessity. Estate plans are a must-have. In the next section, we’ll discuss several key components of small business estate planning. 

Estate Planning for Your Small Business

If you’re a small business owner, you probably have a million things to focus on each day. It’s imperative to carve out time in your schedule, however busy, to create an estate plan. Around one-third of small business owners have no estate plan (Fundera), which means they have no written-down plan for succession. 

Basic Planning 

A will and power of attorney are two basic must-have documents for any SBO. A will states how you want your business to be distributed (succeeded, liquidated, sold, etc.) after you die. A power of attorney will handle financial and business transactions, such as paying bills, handling insurance claims, and such, if you are unable to do so yourself. 

Tax Considerations

This is where it is especially important to hire an attorney, as tax laws are always in flux. Estate planning attorneys might be able to help minimize estate taxes, which are an issue for estates exceeding a certain amount of money (currently, $11.18 million). Other tax considerations include withdrawal of 401(K)s, IRAs, and/or other retirement accounts.  

Buy-Sell Agreements 

Buy-sell agreements are optional and really only apply to businesses that have multiple owners. Buy-sell agreements are legal documents that specify who can purchase an owner’s share of the business. BSAs also specify the conditions and price of the sale. This document lays out what should happen if one of the owners dies, retires, or becomes disabled. 

Insurance

Insurance is one of the most vital tools an SBO can possess. While business insurance is obvious, life and disability are two other insurance policies you should think about. Life insurance coverage will provide your family (or another named beneficiary, like your business) with income when you die. The insurance can also guarantee income to your business, keeping the company operating when you are gone. 

Disability insurance will provide coverage in the event of a short- or long-term disability. Again, it will give your business much-needed cash flow. You can purchase these policies with your family and/or business as the beneficiary. 

Succession Plan

Succession planning specifies exactly how you, your company, and family will prepare for the ownership transition. Succession plans are written documents that lay out what will happen to your company when you die. They include much of the same information as business plans, just with an added section on succession. You’ll want to keep the succession plan document and will consistent with one another, so as to prevent expensive litigation or court battles down the line.

Family-Owned Issues 

Family-owned businesses often face a host of issues that other small businesses don’t. For example, one child of a business owner might want to take over the business, while the other doesn’t. There also might be concerns about keeping family business assets within the bloodline. An estate planning attorney, as well as a financial advisor, will be able to help you find legal pathways to structuring your business estate plan in the way that best fits you and your family.

Updating the Plan

You’ll want to update your estate plan regularly. When you experience major life or business changes, or when tax laws (both federal and state) change, you’ll want to take another look at your documents.  

This guide isn’t the be-all, end-all of protecting your business, but it should hopefully give you a chance to reflect on what you have done and have yet to do for your company. Contact an estate planning attorney to learn more and visit our website for details on how we can help.

The impact of Coronavirus on small businesses has been devastating. While the Small Business Administration gave out loans to help small business owners make it through, many are still struggling or were unable to secure the loan before the money ran out. 

There’s no doubting that small businesses are truly a cornerstone of the American economy. Businesses with less than five-hundred employees account for nearly half of the American workforce and over 43% of the U.S. GDP (Gross Domestic Product). 

One of the main reasons for the struggle is the uncertainly. How long will this last? Will there be a second wave? A second CARES Act? There are a few things to note if you’re a small business looking to keep moving forward. As things open up, keep the following in mind: 

Contingency Plans 

If you haven’t already, make detailed contingency plans in the event of a second wave. Making plans helps people achieve goals, and writing those concrete plans down increases your chance of success. When creating a contingency plan, make sure that you look ahead—what will you do if things are worse in twenty days? Better? This forward-thinking will help in the long run. You won’t feel blindsided. 

Apply for CARES Act Loans if You Haven’t Already 

Currently, this is the link for more information for businesses and lenders: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses. There is an application that you must fill out, and you will likely have to wait in line. The SBA is swamped, and lending $349 billion is as difficult as it sounds. The money goes through the banks, which then lend the loans directly to local businesses. 

Be Prepared to Wait

Be prepared to wait in line. This means including, in your contingency plans, things that you should do to preserve what you can while you’re waiting for your loan. Help your employees contact the government about their loans (unemployment has been increased), and continuously check in with them. Though the idea of waiting might seem daunting, it is important that you don’t let that discourage you from getting in line for the CARES loans.

Your Customers’ Needs Have Changed 

People are soon going to be able to leave the house. Your business needs to change with customers’ changing needs. Comply with the current regulations, whether that means increasing your drive-through or takeout or taking other, similar measures. Do what you can, and reach out to your customers to see how you can keep your connection to them going. 

Consider Other Sources of Relief

Organizations and companies like Verizon, Amazon, Facebook, and the James Beard Foundation are all examples of the private sector stepping up. These relief programs all have their own specifics, but some of them may be able to help you. Above all, keep abreast of the latest developments in the news regarding relief programs, whether privately- or publicly-funded. You don’t want to be the last to know. 

Business Succession Plan 

Lastly, one thing to think about is making sure you have an iron-clad business succession plan in place if something happens to you. We’re not out of the woods yet. Make sure you have a written estate plan that details what you want to happen to your business if you die. Contact an estate planning attorney to make sure it is done correctly.

Everyone is struggling during the Coronavirus, so you are not alone. The constant uncertainty about the virus and the disagreements on how to handle it can be overwhelming. Set out to accomplish one small thing per day. Overloading yourself will only make the feeling of being overwhelmed worse. Hopefully, things will get back to normal soon. 

When people think of estate planning (do people who aren’t lawyers think about estate planning?), they generally only consider it in an individual sense. That’s an important area of estate law, but it is not the only area, by far. Estate planning for small businesses is vital to ensuring the long-term success of your business. You’ve worked hard for what you have, and you want it to last. 

Here are some issues affecting small businesses that make it vital for small businesses to engage with an estate planning attorney:

Taxes 

It’s nicknamed the death tax, but the IRS pretends that nickname doesn’t exist and instead calls it the estate tax. The death tax still exists, and it will affect your small business if the business is part of your estate and meets the financial threshold. The death tax is a tax on the decedent’s (dead person’s) right to transfer their property after death. 

That’s right, even your exit from this earth is taxed. Your small business could be affected by this tax, losing some of its value. However, there are exclusions you can claim or potential deferments of which your heirs can take advantage of. Estate planning will help minimize the tax burden that your small business faces when you pass on.

Trusts, Wills, and Avoiding Probate 

Speaking of transferring property, do you know what will happen to your company if you die? Estate planning for small business includes plans for what will come after the death of the owner. A healthy estate plan will allow your business to avoid probate or being picked apart by creditors. That way, your company’s financial future is far more secure.

Buy-Sell Agreements 

If you aren’t the only owner of your business, you should look into a buy-sell agreement, which will likely be necessary in this situation. Simply put, this type of agreement mandates that the shareholders, upon your death or some other condition, sell their stake at fair market value to others. 

Family-Run Business Issues 

Family-run companies might run into different legal issues than other small businesses, particularly when it comes to succession plans. Family businesses keep things in the family, but there also tends to be an informal structure and culture. There might be pressure to hire other family members, a lack of training, high turnover for non-familiar employees, and other issues that come from keeping a business in the family. 

This isn’t to say that family-run businesses aren’t awesome—they are. But, they do experience their fair share of potential pitfalls specific to such a personalized enterprise. Estate planning, especially for family businesses who have an informal structure, will provide a firm plan and minimize disputes that could otherwise be the downfall of your small business.

Insurance

Life insurance is great for a small business owner because, if the owner dies, the business might not provide enough money for the owner’s family to live on. Life insurance is a big-picture policy. Term life insurance will help you provide for your family after you pass on. 

Sole Proprietorship Concerns

Succession plans are especially important for a sole proprietorship. If you are a sole proprietor, estate planning will help you tell your heirs either how to run your business when you’re gone or what to do with it when you pass away (sell, transfer, etc.). Estate planning will help you lay out that information for your heirs and make the succession and transfer of the company as smooth as possible. 

Small business estate planning is no small matter. Whether you own a sole proprietorship or an LLC, there are a lot of ways that estate planning can provide for your business’s future. There is no reason a good business with a solid financial foundation should be brought down by an issue estate planning could fix. Contact an estate planning attorney today.

Summer means extra time to check up on things you may have pushed to the side during the year. For business owners, this summer period is especially important, as it gives the time to review your asset protection or update partnership agreements. 

Estate planning is particularly vital for business owners, as their business is part of the legacy that they’ll continue to leave behind after their passing. Here are some ways that business owners can update their estate plans this summer. 

Review Asset Protection

An example of such protection is a succession plan. This is important for any business form, whether a partnership, sole proprietorship, or family-owned business. If you don’t formulate a plan for when you pass on, your business will be without direction, and that can seriously harm your company, if not sink it entirely. 

For sole proprietors whose business and personal assets are not separated, you especially need a solid plan of action. An example would be using your personal assets to cover business debts and settle them after you die. You can also pick your successor or, if you plan to sell when you die, find ways to make the sale easy and painless for your heirs. 

Family-run businesses might do things differently, choosing to pick heirs based on their level of contribution to the company. You might want those who are most involved to take over the business and buy out the less-involved stockholders. Losing a family member is difficult enough; you want to make sure that the direction you’re giving your family makes this experience less painful.

Update Partnership Agreements

Updating partnership agreements is another area in which business owners (partnerships) can benefit from thorough estate planning. An example of a common tool that partnership agreements use in the event of a death of one of the partners is a buy-sell agreement. 

In a buy-sell agreement, the partners establish a plan for the business in the event of the death/incapacitation of one of the owners. In this document, you can tell your partners whether or not you want them to buy out the share you own, block certain people from becoming involved in the business, or sell your share. This requires a lot of communication, but it is worth it to ensure the health of your business. 

Tax Minimization 

The “death tax” is just as ominous as it sounds. It is a tax on the value of your business that is due in less than a year of your passing. To prevent your death from turning your business into a must-sell, there are two different types of tax breaks, found in sections 303 and 6166 of the IRS code, which have to do with stock value and deferral. You can use estate planning to take advantage of these sections and save your business’s value after you die.

Business owners, whether they’re proprietors of small, mid-size, or large businesses, all need to stay up on their estate plans, as this diligence will ensure the future growth of their businesses even after they have passed on. Use the extra hours this summer to review your plan and make updates if needed.