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Why estate planning is essential for businesses

Tennessee business owners have a great deal to consider when planning for the protection and longevity of their companies. However, one layer of security that is often overlooked is business estate planning and probate. Most people make provisions for the financial care of family upon their demise. Unfortunately, many business owners neglect to properly plan for the survival of the very thing they have spent their lives building. While business estate planning might seem overwhelming, there are substantial considerations that make it necessary to begin a business estate plan as soon as possible.

In order to last beyond the lifetime of the owner, it is necessary to establish a pathway to have the business transition from one generation to the next. Without a plan in place, the business could flounder, costing employees their jobs and livelihood. An estate business plan will create a procedure for management to carry on the daily operations of the business following the death of the owner.

Estate planning for the business could also include a buy-sell provision if there are other owners. A buy-sell is a commonly used agreement that gives the additional owners of the business a way to automatically purchase the company's interest from the deceased party. It also prevents the deceased family members from inheriting ownership.

Paying unnecessary taxes is a concern for business owners, especially when the business is transitioning due to a death. Proper estate planning may help avoid excessive taxation by creating a trust or a family limited liability company that will minimize the financial burden on the business estate.

Creating a succession plan can help the owner keep his or her business running the way they wanted, even after death. Depending on the complexity, some succession plans can take as long as 10 years to become fully integrated. That's why it is important to begin succession estate planning early.

Estate and probate procedures can be complicated to say the least. An attorney who is experienced in business estate planning and probate may provide guidance to help clients save time and money as well as protect the interest of the business for generations to come.

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