Let’s say you have a thriving, family-owned business. In order to protect its legacy, you need to create a plan to make sure it thrives for future generations, too. At Best Coast Estate Law, PC, we combine succession planning with tax minimization strategies to build an estate plan that secures your family’s future, while preserving the business’s values and stability.

How to Protect Your Family Business in an Estate Plan

Here’s how our Burbank estate lawyer builds an estate plan:

1. Start Early with Succession Planning

Succession planning is not just about naming a successor; it’s about developing a comprehensive strategy that prepares the next generation for how to manage your company’s assets. We can help you name potential successors, within your family or outside of it, but it’s important to consider their skills, interest, and long-term vision for the company. Start grooming potential leaders by providing opportunities for training, mentorship, and hands-on experience.

One thing we suggest is to include a clear outline of roles and responsibilities. Documenting key aspects of management and leadership expectations in your estate plan can prevent misunderstandings and conflicts among family members.

Establish a timeline for the transition, if possible, and include contingency plans in case the primary successor is unable to take over when the time comes.

2. Minimize Taxes Through Strategic Planning

Estate taxes can create significant financial challenges for a family business. The sale of a business might only be enough to cover the business’ tax obligations, for example. To mitigate risks and maximize profits, our California estate planning law firm helps clients create:

  • Gifting Strategies: We can help you gift shares of the business to family members over time to reduce the taxable value of the estate. 
  • Trusts: We help families make trusts to provide liquidity to cover estate taxes without the need to sell business assets.
  • Family Limited Partnerships (FLPs): We can help establish an FLP to transfer ownership to heirs while maintaining control over the business. 

We offer consultations with an estate planning attorney to find out which of these strategies is the best fit for you.

3. Safeguard the Legacy of Your Family Business

Your business is more than an asset; it’s part of your family’s identity. Protecting its legacy involves not just financial planning, but also the preservation of the values that made the business successful. Here’s how:

  • Document Your Story: We suggest creating a written history of your business, highlighting its core values, mission, and milestones. This can be a valuable guide for future generations to understand the company’s roots and ethos.
  • Create a Governance Structure: We suggest establishing clear rules for decision-making and conflict resolution.
  • Involve Non-Family Professionals: Sometimes we suggest bringing in third-party advisors, or non-family executives, to share their expertise and ensure an objective perspective in important business decisions. This can help reduce familial tensions and maintain operational integrity.

4. Review and Update Your Plan Regularly

An estate plan is not a static document; it should evolve with your family’s needs and business growth. Review your plan regularly to see if any changes need to be made, like incorporating the addition of new family members, shifts in business operations, or updates in tax legislation. 

Conclusion

Protecting your family business through an estate plan is an essential investment in your legacy. By prioritizing succession planning, employing tax strategies, and maintaining the business’s values, you can create a pathway for continued prosperity. Reach out to the estate planning lawyer team at Best Coast Estate Law, PC for more information. We’re happy to help.

Disclaimer: The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. Brittany Britton is licensed to practice law in the state of California only