A plan should be reviewed periodically and after important changes. Reasons for a review may include: A new owner or business partner A major increase or decrease in business value Retirement plans Marriage or divorce Births or deaths in the family A child joining or leaving the business Changes to business agreements Changes in tax or estate planning laws Regular … [Read more...] about How often should a business owner review an estate and succession plan?

Potentially. Federal estate and gift tax rules can apply when business interests or other property are transferred during life or at death. Maryland tax rules may also affect an estate depending on the circumstances. Taxes can be especially important for a family whose wealth is concentrated in a business. A valuable company does not necessarily mean the family has enough cash available to pay … [Read more...] about Could estate or gift taxes affect a family business transfer?

Life insurance may provide funds that can support certain business succession strategies. For example, insurance proceeds may help fund a purchase under a buy-sell agreement or provide liquidity for family members after an owner’s death. Life insurance ownership and beneficiary designations should be coordinated with the estate plan and business agreements. Tax and financial professionals may … [Read more...] about Can life insurance be used in business succession planning?

A business valuation helps establish the value of an ownership interest. Knowing the value may be useful when creating a succession plan, preparing a buy-sell agreement, considering gifts to family members, dividing an estate, or reviewing possible estate and gift tax issues. Because business values can change, owners may need updated valuations as the company grows or circumstances change. … [Read more...] about Why is a business valuation important?

A buy-sell agreement is a contract that addresses what happens to an ownership interest after certain events. These events may include death, disability, retirement, or an owner’s decision to leave the company. The agreement may identify who can purchase the ownership interest, how the purchase price will be determined, and how the transaction will be funded. For businesses with multiple … [Read more...] about What is a buy-sell agreement?

In some circumstances, business interests may be transferred to a Trust. Whether this is appropriate depends on the type of company, its governing documents, tax considerations, and the terms of the Trust. A properly structured and funded Trust may provide instructions for managing or distributing business interests after incapacity or death. It may also allow certain assets to transfer outside … [Read more...] about Can a Trust hold an ownership interest in a family business?

A financial power of attorney can give an agent authority to handle certain financial and business matters for the person who created the document. However, a Power of Attorney should be coordinated with the company’s governing documents. An operating agreement, partnership agreement, shareholder agreement, or other contract may contain separate rules about who can vote, manage the company, or … [Read more...] about Can a Financial Power of Attorney allow someone to manage the business?

An illness, injury, or cognitive decline can affect an owner’s ability to make financial and business decisions. Without advance planning, family members may be uncertain about who has authority to act. In some cases, court involvement may become necessary. An incapacity plan can identify trusted people who are authorized to handle financial matters and may help provide continuity for the … [Read more...] about What happens to a family business if the owner becomes incapacitated?

No. Equal treatment does not always require giving each child the same percentage of a company. For example, one child may work in the business while another has chosen a different career. A parent may want the child who works in the company to receive control while providing other assets or benefits to other children. There are several ways to address these goals. The right approach depends … [Read more...] about Does every child need to receive an equal share of the business?

An ownership interest in a business may be one of a person’s most valuable assets. If the estate plan does not address that interest, ownership or management decisions may be affected by probate, business agreements, or Maryland law. Business planning and personal estate planning should work together. A Will, Trust, Power of Attorney, operating agreement, shareholder agreement, or other … [Read more...] about Why should a family-owned business be included in an estate plan?