Estate Planning Issues

Estate planning deals with the legacy of the owner both in the business, the owner's family, and in the community. The estate plan must coordinate with the contingency plan, the transition plan, the personal values of the owner, and the financial goals and needs of the owner's legacy.

Common issues requiring coordination between business planning and estate planning are:

  • Providing authority to personal representatives and trustees to implement a sale under the business buy-sell agreement.

  • Selecting personal representatives and trustees who are not prohibited by statute (self-dealing restrictions, for example) from acting with respect to business interests.

  • Planning for the estate's liquidity needs (tax payments, for example).

  • Ensuring that the buy-sell agreement value controls for estate tax purposes.

Properly done, the estate planning of an owner should involve the same definition and review of values that the transition planning process uses. Values-based estate planning will enable the owner to realize the satisfaction from the estate planning process and the realization of an appropriate legacy. (See Estate Planning for the Healthy Wealthy Family, Baris, Garrity & Neeleman, Allworth Press, New York.)

Essentially estate planning deals with how the assets of the business owner are held and distributed. It is a dynamic and ongoing activity, not a reaction to an event. It is as much about management as distribution. It is influenced but not controlled by tax law. As with other planning, estate planning should be assessed periodically.

BTC can review estate planning, including specific document reviews, for consistency with contingency and transition planning, the values defined in the transition planning process, and the appropriate financial distribution of assets and use of trusts and other means of asset distribution and management.