Running a business often feels personal, because it is. Whether it’s a company you built from the ground up or one passed down through generations, it likely represents years of effort, risk, and sacrifice. But what happens to it if something happens to you?
In my years working with business owners, I’ve found that estate planning isn’t just about passing on wealth; it’s about preserving purpose, protecting people, and preventing disruption. Without a clear plan, families may face legal delays, surprise taxes, or even the forced sale of a company no one was prepared to run.
In today’s legal and economic landscape, intentional planning is more important than ever. Let’s take a closer look at what business owners should be doing in 2025 to secure the future of their company and legacy.
Who Will Run the Business When You’re Gone?
The cornerstone of a business owner’s estate plan is succession. If something unexpected happens, who will take over? Too often, there’s no clear answer.
There are a few options. Some owners want to pass the business to a child or relative. Others prefer to sell to a business partner or long-time employee. And in some cases, an outside buyer is the best solution. Regardless of the path, what matters most is that you make a plan while you’re still in control.
Legal tools like buy-sell agreements can spell out what happens to your ownership interest, especially in partnerships. Powers of attorney can allow someone you trust to step in temporarily if needed. The Small Business Administration also recommends owners explore exit strategies early, not just before retirement, but anytime major life changes are on the horizon.
Without these safeguards, a court may decide who manages or inherits your business. That process can be time-consuming and expensive, and it often doesn’t align with your values or vision.
Protecting the Business from Personal and Financial Risks
Your business is likely one of your most valuable assets, but also one of the most vulnerable if not properly protected.
While forming an LLC or corporation protects against business liabilities, estate planning helps shield those assets from personal financial risks, like lawsuits or creditors.
Let’s say a business owner is sued personally for an unrelated matter. If the business is held in a properly structured trust, those assets may be protected. Similarly, family limited partnerships (FLPs) can allow you to transfer ownership interests to heirs while retaining management control, reducing both estate taxes and liability exposure.
Insurance also plays a role. A key person life insurance policy can provide liquidity if a vital owner or partner passes away. This cash can help keep the business afloat while leadership transitions.
Making the Most of Tax Strategy and Business Valuation
One of the biggest risks to a business during an estate transfer is taxation. If the IRS values your business highly and your estate lacks liquidity, your heirs may have to sell assets to pay the tax bill.
That’s why business valuation is critical. Working with qualified appraisers allows you to establish a fair, supportable value. From there, tools like valuation discounts for minority ownership or lack of marketability can reduce the taxable value of your business.
You might also explore gifting shares annually, using an IDGT to shift future appreciation out of your estate, or employing an FLP to retain control while reducing taxable value.
Steps Business Owners Can Take Today
Start Early, Even if You’re Not Ready to Retire: Planning while you’re healthy and active gives you more flexibility. It also ensures that you—not the courts—decide what happens next.
Update Your Operating Agreements: If your business has multiple owners, make sure your operating agreement includes clear instructions for succession or transfer in the event of death, incapacity, or divorce.
Work With a Team: An estate attorney, CPA, and financial advisor can help coordinate your plan so that it’s tax-efficient and aligned with your personal goals. Estate planning isn’t one-size-fits-all, especially for business owners.
Address Liquidity: Many business owners are asset-rich but cash-poor at death, making liquidity planning essential. Without a plan, your heirs might have to sell the business just to pay taxes. Consider life insurance, buy-sell agreements, or trusts to create liquidity.
Revisit Your Plan Regularly: Laws, business value, and family circumstances change. Review your estate documents every few years to ensure they still reflect your wishes.
Conclusion
Owning a business means wearing many hats. But when it comes to estate planning, don’t wait until it’s too late to take action. A thoughtful, proactive approach can preserve your life’s work, support your family, and minimize tax burdens down the road.
At Bascom Law, we’re here to help you navigate the intersection of business ownership and legacy planning. Whether you’re years from retirement or already considering a transition, we can build a plan that fits your goals and protects what you’ve built.
To schedule a consultation, visit BascomLaw.com or call 770-285-5493.
Sources
IRS: Small Business Succession Planning
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