For both new and seasoned business owners, establishing a comprehensive estate plan is not just prudent—it’s essential. A well-structured estate plan ensures the continuity of your business, minimizes legal complications, increases tax efficiency and provides financial stability for your loved ones. Working with an estate planning attorney in connection with all phases of your business life cycle (from establishing the business to sale or transfer to family) is key to achieving these goals
Business Succession Planning
Succession is a critical element to a business owner’s estate plan. Without a clear plan, your business could face disruption or even failure upon your death or incapacity. An estate planning attorney can help you create a succession strategy that includes appointing a team of trusted advisors—such as co-trustees, business managers, or family members—within your estate planning documents. This team can manage operations, make strategic decisions, and ensure the business continues to thrive in your absence. Without such planning, the death of the business owner may easily result in a fire sale, mismanagement, unnecessary probate complications and family instability.
Putting a thoughtful and clearly-expressed business succession plan in place will help avoid family disputes and ensure your wishes are carried out effectively and with maximum efficiency.
Probate Avoidance for Closely Held Business Interests
Probate can be a lengthy and costly process. If your business interests are not properly titled or transferred into a trust, they may be subject to probate, delaying access to critical assets, exposing confidential information in public documents, and potentially harming business operations.
In a probate proceeding, the business interest will need to be appraised, and such value will be reflected in the probate court docket as a public record. An estate planning attorney can help you structure ownership—through revocable or irrevocable trusts—to avoid probate entirely. This not only protects your business but also preserves privacy and reduces administrative burdens for your heirs.
Planning for Liquidity
Liquidity is often overlooked in estate planning. Upon your death, your estate may face significant tax liabilities or operational expenses. Life insurance can provide the necessary liquidity to cover these costs without forcing the sale of business assets. Your attorney can help you integrate life insurance into your estate plan, ensuring policies are owned by the appropriate entity—such as an Irrevocable Life Insurance Trust (ILIT)—to maximize tax efficiency.
Advanced Planning for High-Net-Worth Owners
High-net-worth business owners should consider advanced trust strategies to reduce estate and gift taxes. As a reminder, the federal estate tax is a tax on 40% of the assets in excess of a person’s $15 million exemption (beginning in 2026); this exemption covers both assets included in your estate for federal estate tax purposes and gifts made during a person’s lifetime. Gifting assets to certain kinds of irrevocable trusts, such as Spousal Lifetime Access Trusts (SLATs), allows you to transfer assets out of your estate while still providing access for your spouse and/or lineal descendants. These “value-freezing” techniques ensure the growth and income attributable to the asset following the transfer will be removed from your taxable estate.
Additionally, ILITs offer estate tax-free death benefits for insurance policies purchased by the ILIT and which name the ILIT as the beneficiary.
If you are planning to exit from your business soon, charitable planning, such as gifting closely held business interests to Charitable Remainder Trusts (CRTs), can reduce capital gains taxes, reduce your taxable estate and support philanthropic goals. This approach and the aforementioned tools require careful coordination and legal expertise, making your estate planning attorney an indispensable part of your advisory team.
Conclusion: A Team-Based Approach
Estate planning for business owners is not a one-size-fits-all process. It requires collaboration among your attorney and other professional advisors. Your estate planning attorney can serve as the architect of your plan, ensuring all components—from succession to tax strategy—work in harmony. By including your attorney in your team of advisors, you safeguard your legacy, protect your business, and provide peace of mind for your family.
