Those who want to ensure that everything’s done right, and will have the best overall outcome after their passing, will want to consult a tax attorney while creating their wills and estate plans. These experts will know just the right questions to ask to help you plan for the future. Take a look at some of the questions they’ll ask to help you plan for what to expect.
If you’re helming the ship of your small business right now, knowing your plans for retirement will help your tax attorney understand the general direction for how to create your estate plans regarding your business. Do you have any business associates, or have you kept your entrepreneurial dreams solely within the family? Do you hope that your daughter will one day take over the business, but have external partners in the meantime, as she’s only in the seventh grade? Who will manage the day-to-day affairs of your business when you’ve retired and are enjoying your well-earned time off? Your tax attorney will need to have a good understanding of this to frame the remainder of your plan around it.
This question will be a logical follow up question to your retirement plans. If you have an idea of who you want to take over when you retire, will you want that person to continue their leadership after you’ve passed, and then transfer ownership to them? Or, will you want to keep it in the family and transfer the ownership to your children with the assumption that they’ll be old enough by the time you die? Taking the time to make this decision will help you plan for the future in terms of training your employees, as well as helping you to work with your successor and your tax attorney to minimize the tax burden at the time of transfer.
As a business owner, especially when first starting out, it’s tempting to mix your business and personal bank accounts for ease of use and because at the beginning, you’re using your personal funds to start up the business. But once you’re a steady small business, you’ll need to make sure that each entity has its own account and paperwork, otherwise it will be much more difficult to determine who receives what once you’re gone. You want to make sure the business is able to continue paying its bills and turning a profit, which could be difficult if no one knew what money in your account was supposed to be kept for business use.
If you haven’t already started this, you’ll want to do it as soon as possible. Not only will it help with your estate taxes once you’re gone, but it can also help your business’ income taxes now, and you may even be able to find ways to save money with a clearer financial picture readily available. It will also help make sure that you’re not in trouble with an IRS tax audit.
Aside from knowing all of your living descendants and close family members, make sure to tell your tax attorney about any close business partnerships and associates that may come out of the woodwork after you’ve passed. While it’s unlikely to happen if you’ve worked with people in open, transparent relationships, you never know what might occur. Talking this over with your IRS tax attorney during the estate planning stage will help ensure a stable future for your small business.