How Business Ownership Impacts Estate Planning

If you own a business in central Illinois, you may wonder if you need to include your enterprise in your personal estate plan. Your business may be your largest asset. At my firm, John E. Kerley Attorney at Law, P.C., I regularly develop customized estate plans for business owners. As an experienced estate planning attorney, I’ve worked with many types of entrepreneurs and leaders of family-owned businesses in Springfield and throughout Sangamon County. 

The more effort you put into a detailed succession plan and the more specifically you include your wishes for your business in your estate plan, the less likelihood your co-owners and family members will run into conflicts about how to continue the company after you’re gone. 

My goal is to make estate planning concepts easy for you to understand, so you can make intelligent decisions for yourself and for future generations. I know you have limited time to focus on these matters. I offer direct, one-on-one consultations with clients and return your calls promptly. I handle your case myself and aim to complete your requests without unnecessary delays. 

Why Business Owners Need More Than A Basic Estate Plan

Your relationship to your business can vary dramatically based on its legal structure and your ownership status. The business itself needs a succession plan to ensure continued operation when a co-owner dies, retires or becomes incapacitated. If you run business accounts solely in your personal capacity without designating an authorized agent or transferring them to a trust, financial access is frozen upon your death or incapacity until a court grants legal authority, which can force operations to halt. 

I can help you evaluate your personal estate needs and pair them with your business ownership profile. Whether you own one enterprise or half a dozen, I sort your responsibilities and legal control for each one and can help you map a clear strategy to keep them running. I can also draft documents that help the business from becoming part of probate, designate which family members will take control of your business after you’re gone, and outline how relatives who are not involved in the business may be compensated. 

Components Of A Strong Business Succession And Estate Plan

Most business owners in Sangamon County will need to consider the following components as I work with them to create an estate plan and a business succession plan: 

Buy-Sell Agreement. If you co-own a business with others, this document will spell out what happens if one of you dies, becomes incapacitated, retires, or leaves the business. It is a legal contract that discusses who may buy the departing owner’s share, how it should be valuated, and who can purchase it.  

Life insurance. Life insurance is often used by co-owners within a buy-sell agreement to buy the deceased owner’s share and compensate their heirs quickly.  

Durable financial power of attorney. This document designates an “attorney in fact” to act as your proxy in financial matters if you are incapacitated and unable to participate in the business. 

Trusts. Various types of trusts, including revocable living trusts or irrevocable trusts, can play significant roles in protecting business assets from creditors or avoiding probate during estate administration. 

Tax planning. This step is critical because large business assets may trigger state or federal estate taxes, which are assessed directly against the estate before distributions.

I take the time to talk to you one-on-one to discover which legal instruments fit your situation. You can ask any questions you like, and I am happy to explain my recommendations to your business co-owners or family members. 

Common Business Succession Scenarios I Can Help You With

While I provide individualized solutions to your estate and business succession planning questions, I have gained experience from helping Illinois residents with a variety of succession scenarios. I’ve acted as a business succession lawyer for your friends and neighbors in the following situations: 

• Families passing the business to the next generation, while treating nonbusiness-involved children fairly
• Businesses selling to a key employee or partner over time
• Business owners planning for retirement who want to maintain income from the business
• Entrepreneurs shielding their business from creditors and divorce
• Co-owners needing a plan for the business if any owner becomes irreversibly incapacitated before retiring 

I have worked with central Illinois business owners for more than three decades. I understand the community values that inform our area and the importance of business continuity to our economy. 

Must-Know Answers To Common Business Succession And Estate Planning Questions

Business ownership comes with both risks and rewards. I’ve drafted answers to two of the most important questions about business succession and estate planning to help you lower your risk and enhance the potential for reward through smart legal protections. 

Do I need a business succession plan if I already have a will?

Yes, you do need a business succession plan in conjunction with a will for your personal estate. Your will only addresses ownership of your business asset, not who will run the daily operations, what should happen if you are incapacitated before you die, or how the business can avoid becoming part of a probate case during estate administration. 

What happens to my business if I become incapacitated before I retire?

Without an operational succession strategy combined with an Illinois durable power of attorney or trust, there will be no authorized individual legally empowered to sign paychecks or execute contracts during your incapacity. It also leaves any co-owners without a plan to continue the business or compensate your heirs fairly in a buy-sell agreement. 

Safeguard Your Hard-Earned Business Investment With A Customized Estate Plan

Don’t risk the security of your family or your business partners by not making a plan. Call my office in Springfield at 217-814-0148 or reach out online to request a consultation to align your business succession plan and personal estate plan.