When one works hard to establish a family business, it is often hoped that one's heirs will take over the company and grow it into the future. This is the reason many business owners work hard to ensure that their family will benefit from their efforts to make the entity successful. Without proper estate planning, however, New York residents might not be able to preserve their family's legacy.
There are many reasons to draft estate plans when one owns a business. The most pressing reason is often to prevent the company from being consumed in estate or inheritance taxes. Based on the current federal tax laws, each heir is entitled to receive a maximum of $11.2 million without owing taxes. After that amount, taxes are assessed at 40 percent on the remaining amounts. New York also has a set rate for estate taxes, and careful planning can help ensure that any taxes owed are paid according.
Along with addressing the issue of taxes, thorough estate plans will enable a business owner to control who inherits the business and how any assets are distributed. Furthermore, establishing a will can avoid the possibility of probate, which could result in the liquidation of assets. One may also choose to establish a trust, which can ensure even tighter control over how a business is preserved for beneficiaries.
Once an individual has drafted the plans that best suit his or her purposes, it is vital to update those plans on a regular basis. Life changes, as well as changes in federal or state laws, could necessitate updating any existing documents. New York residents who are concerned about preserving their family's legacy can seek assistance in the estate planning that will best suit their individual needs and circumstances.
Source: hotelmanagement.net, "How to handle estate planning for continued business growth", Alicia Hoisington, Feb. 13, 2018