Estate planning tips: ten suggestions to prepare for business after death.

AuthorHromadka, Erik
PositionESTATE PLANNING

WHILE MOST BUSINESS owners have grand plans for the future of their companies, they often find it difficult to consider that future when they are no longer around. That's why estate planning experts from around the state encourage business leaders to take some time now to plan for the impact of their death on both their families and businesses.

Greta Roemer Lewis, a partner with Barnes & Thornburg in South Bend and one of the state's initial class of Certified Estate Planning and Administration Specialists, says although people don't like to talk about death or taxes, estate planning is something that shouldn't be avoided.

  1. Do something. "Do something, even if it won't be perfect," she encourages. "What I found is because things can be so complex, people get frozen into doing nothing."

    And that can be a mistake, especially for business owners who pass on estates with high values that face up to a 45 percent federal estate tax on everything after the first $2 million. While Indiana estate taxes are lower, they can also reduce an estate's value depending on its size and recipients. Indiana estate taxes have varying rates from the most favored group, including parents and children, who have a $100,000 exemption and a maximum rate of 10 percent, to those who are not related at all and face a maximum rate of 20 percent with an exemption of only $100.

  2. Understand the value of the estate. Putting a value on the estate and deciding to whom it will be passed is one of the first steps in the process, Lewis says. However, she points out that may not be a simple task. For example, families with several children are likely to have some who are more interested and involved in the business and others who would benefit more from an inheritance of cash.

  3. How to treat the children. "Evaluate how to treat the children who are not active in the business," she advises, noting such decisions should be made carefully and can affect both the dynamics of the family and the company

    Although it may seem "fair" to give each child an equal percentage of the business, that may not be the case if some have been more involved in building the value of the company At the same time, children may have differing needs and interests and considering those is no less "fair" than providing braces for a child who needs them while not spending an equal amount on other siblings.

  4. Get a team of advisors. Lewis suggests taking advantage of the same professionals who regularly guide...

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