Broker Check
How Business Owners Can Plan for the Unexpected

How Business Owners Can Plan for the Unexpected

October 12, 2022


We understand estate planning is a tough conversation to navigate, but let’s face it, it’s a critical topic. Growing generational wealth requires proper planning and protection of your assets. As individuals, we know the importance and value of having a will in place. A will allows you to communicate your wishes clearly and precisely and ensures the management of your personal estate. Just like a personal will, having an estate plan in place for your business empowers you to choose what happens when you are no longer able to run your business.

As a business owner myself, I recognize that your time is dedicated to the daily operations of your business and to its overall success. No one wants to imagine a time when they cannot take an active role in something they have invested so many years and most likely also their blood, sweat, and tears into. However, if you don't have an estate plan, then state law, could dictate what happens to your business.

Making a plan for how business matters are handled in the event of your death can help you avoid excess taxes and debts and also provide a sense of security for your staff and family. Your goal should be for your business to continue to thrive even in your absence.

Having a succession plan for your business is a part of your overall estate plan.

Succession Planning: What You Need to Know

Who is the right person to fill your shoes when it’s time for you to take a step back? By working with a qualified financial advisor, you will receive the help your company needs during a leadership transition. By developing an overall strategic plan that addresses leadership changes, retirement funding, buy-sell agreements, and estate planning, you are leaving your loved ones with a sense of peace.

A strategic plan could include:

  • A comprehensive strategy for keeping the business operating day-to-day.
  • An assessment of essential and non-essential operations and processes.
  • An analysis of key employees/positions and how each would be impacted by disruption and, specifically, the potential loss or unavailability of key employees.
  • A review of facilities and analysis of how the business operates if one or more locations become unavailable.

If no plan is in place, the succession structure may result in a decline in the value of the business.

Tax Implications

Tax planning is a major component of estate planning. Our tax laws change frequently, so you must stay in constant contact with your attorney to develop strategies for decreasing your tax liability, as well as creating a strategy for minimizing inheritance/estate taxes. Typically, estate taxes are due nine months after the date of death, and estate taxes are paid in cash. In addition to estate taxes, there may be a variety of other costs, including probate, final expenses, and administration fees. Without proper planning, estate taxes can erode the final position of the company.

Purchase Insurance

Small business owners should consider life insurance so that their beneficiaries have a source of income after their death. In addition to a personal policy, the business should purchase a key person policy. The business will pay the premiums and would be the beneficiary of the plan. If the business owner dies, the business would receive the insurance payout.

This specific type of insurance earnings can be used in a variety of ways, including paying off debts, offsetting day-to-day operating expenses, supplementing lost revenues until a replacement can be hired, or, in extreme cases, distributing money to investors, paying severance to other employees, and closing the business down in an orderly manner.

Buy/Sell Agreement

If your business has partners, a buy-sell agreement can be very useful. Buy-sell agreements are used if one of the owners passes away, leaves the company, or becomes incapacitated. The agreement specifies who can buy an owner’s share of the business, under what conditions, and for what price.


A trust can be useful not only to reduce estate taxes but also to ensure the continued running of your business if you die or become incapacitated. Because a trust passes outside of probate, the assets in the trust can be transferred immediately to the person you want to run the business without waiting for the entire estate to go through probate. In addition, if you become incapacitated, the trustee can continue to run your business without court involvement.

Final Thoughts

At Willis & Machnik, we understand the intricacies of business ownership. We’re skilled at navigating buy/sell negotiations and developing strategies to pass on the company you created. Contact us today to get started and let us be your complete wealth management partner.