Corporate Tax and Estate Planning
No business, big or small, is exempt from the inevitable; eventually the business will change hands or close. When structuring your business, it is important to consider your exit strategy or succession plan, implement tax-effective strategies, and ensure shareholder agreements encapsulate what will happen at the time of sale or if a shareholder passes. When you establish a comprehensive tax and estate plan, you can safeguard your assets, maintain a profitable business, and optimize your financial growth. More to you, more to your family and less to tax.
What is a tax and estate plan?
As a business owner, you have invested substantial time, resources, and effort into ensuring the success of your business, and it deserves to be protected. A tax and estate plan is a comprehensive and strategic roadmap designed to help an individual or business owner minimize tax obligations and protect assets while ensuring a smooth and profitable transfer of assets to beneficiaries upon death, critical illness, or disability.
What elements should I include in a tax and estate plan for a business?
The plan can include various elements such as:
- Your will, and powers of attorney
- Trusts, and corporate structures
- Insurance assets
- Investment assets
- Real property assets
- Other requested documents specific to your scenario
There may be additional tools that enable individuals and business owners to manage their assets effectively while minimizing their exposure to taxes and other obligations. A tax and estate plan helps to maximize wealth potential while reducing risk and maximizing tax efficiencies.
Other considerations should be:
- A change to the corporate structure
- Whether or not there is a board of directors
- Lenders and creditors to the company who may get a seat at the table. Do these lenders have any covenants that include insuring the lives of the ownership group or key persons?
In turn, a tax and estate plan for your business is a plan for how you want your assets to live and how you wish your business to operate after you’ve passed,or fall critically ill or disabled.
FAQ
Why is tax and estate planning important for my business?
Tax and estate planning for a business is crucial for several reasons. It helps protect your assets, ensures the smooth transfer of ownership, minimizes tax obligations, maximizes wealth potential, and reduces potential conflicts among stakeholders. By having a well-designed plan in place, you can safeguard your business’s profitability and ensure its sustainability for future generations.
When should I start tax and estate planning for my business?
We advise you to start tax and estate planning as early as possible, ideally when your business is in its initial stages. However, even if your business is established, it is never too late to implement a plan.
Who should be involved in tax and estate planning?
Typically, plans begin with the owner(s) of the company along with a trusted accountant. Over time, other beneficiaries, spouses, family, and shareholders may also be involved in the planning process.
Who can assist with tax and estate planning?
We highly recommend consulting professionals who can help you navigate complex tax laws and leverage estate planning strategies for your business. Working with a trusted accountant, lawyer, and Gifford Carr advisor can help.
