[00:00:00] Welcome to Law Days and Lattes. The podcast where we blend the world of law and business with a warm cup of information and common sense. I'm your host, Sidney Wheelan, attorney, real estate investor, and business owner. Each week we'll be your go to source for legal insights, business advice, and so much more.

Whether you're a seasoned professional and ambitious entrepreneur, or simply someone seeking guidance, we'll have you covered from navigating the legal landscape to empowering. You, with valuable business strategies, we'll explore the legal side of life and enjoy a virtual latte along the way. So, grab your favorite [00:01:00] latte, get comfortable, and let's dive into Law Days and Lattes.

Welcome back to Law Days and Lattes, where we break down the legal side of life. Life over a cup of coffee. I'm Sidney Wheelan, your host and founder of the Wheelan Law Firm of Moberly, Missouri, your go to source for legal issues facing your family and your businesses.

Today, we're tackling a crucial, but often overlooked topic, estate planning for entrepreneurs. You've worked hard to build your business. Don't let it crumble because of poor planning. If something happens to you, who takes over? How will your family be provided for? Without an [00:02:00] estate plan, the court's -not you-

decide what happens next. Before we dive in, here's a reminder. Estate planning is not a do it yourself project. You NEED an attorney. An accountant and potentially other professionals to ensure that everything is structured correctly for your business and your financial situation. So, grab your latte and let's get into it.

What happens if you don't have an estate plan for your business? Many business owners assume their family will figure things out if something happens to them. Unfortunately, that's rarely the case. Let's take the story of Lisa, for instance. A small business owner who built a thriving salon over 15 years.

She suddenly passed away without a will. Or a business succession plan. Her family fought over ownership and since no one had legal [00:03:00] authority to run the salon, it closed within months, leaving employees jobless and customers without their favorite salon. What went wrong? Lisa didn't have an estate plan.

Her business went through a long probate process leading to delays, disputes, and financial loss. So the lesson, if you own a business, you need an estate plan that outlines who inherits, who takes over the operations, and how the transition is to happen smoothly. Next, let's talk about the key planning documents for business owners.

Your will, it's the basic foundation. A will outlines who inherits your assets, including your business. However, a will alone does not keep your business out of probate. As an attorney who handles both estate planning and probate issues, I can assure [00:04:00] you that you need to consult an attorney on this one.

I've had two clients come in to me this week alone with wills that were left by their loved ones that did not comply with Missouri's laws regarding the proper execution and witnessing of wills and the sad result? These wills will not be admitted to probate, and the state's laws on intestate succession will control the distribution of the assets, not the wishes of the loved ones that tried unsuccessfully to write their own wills.

The second document that you want to consider is the revocable living trust. A revocable living trust can transfer business ownership without probate. It ensures a smooth transition if you pass away or if you become incapacitated. It keeps business details private. [00:05:00] Remember, if it goes through probate or through a will, wills are a public record that have to be recorded.

For an example, let's take a business that did survive. Unlike Lisa's business, Sarah was a bakery owner. She had a trust. When she passed unexpectedly, her trust transferred ownership smoothly to her daughter, per her wishes. The business remained open. Employees kept their jobs, and Sarah's legacy lived on.

So the lesson here, if you want your business to continue after you're gone, a trust is a must. And it must be properly funded, meaning your business must be legally placed in the trust. Your estate planning attorney can help with this, so be sure to talk to them. The third document that you may need is a power of attorney, because who runs the business if you [00:06:00] can't?

If you become incapacitated, who makes business decisions? A power of attorney appoints someone to manage your finances and your business operations. Here's another real world example. A retail store owner had a stroke and was in a coma for months. Without a power of attorney, his family couldn't access the bank accounts or pay his employees.

His business suffered while the courts took months to grant someone legal authority to run the business. So the solution, a financial durable power of attorney ensures that someone you trust can run your business. If an emergency happens. Let's talk about business succession planning. Who will run your business when you're gone?

If you want your business to survive after you've gone, you need a business succession plan. For example, let's talk [00:07:00] about the family business that fell apart. A father and son ran a successful farming operation. When the father passed away unexpectedly, there was no clear succession plan. The son wanted to keep the farming operation, but his siblings wanted to sell it for some substantial quick cash.

The farm and all of its assets were ultimately liquidated. The lesson here, a succession plan prevents family disputes and ensures that there is a clear transition of leadership and ownership. So, what things should a succession plan include? Who will take over the operations? A family member? A business partner?

Or maybe a key employee? How will ownership transfer? Will you sell it to a co owner? Pass it on to heirs? Convert it to a trust? How will the operations [00:08:00] continue? Who has access to the financials, the contracts, and the passwords? Next, we want to talk about minimizing the taxes for entrepreneurs. If your business is valuable, taxes can take a hunk out of your state.

Smart planning, though, can reduce or eliminate this burden. Let's talk about the next case study. A successful entrepreneur left his business to his children. But they faced a huge tax bill that they couldn't afford. To pay for it, they were forced to sell the business. So, if your business is large enough to trigger estate taxes upon your death, planning strategies like gifting, Life insurance and trust can help reduce the tax burdens and keep your business intact.

Gifting business shares to heirs before death to lower the tax [00:09:00] estate, using trust to protect assets, and setting up a life insurance policy to cover the estate taxes are some of the things that you can do. And remember, Leaving your property to your heirs can, in some circumstances, eliminate capital gains taxes altogether by transferring the assets at a stepped up basis to your heirs.

Again, this is a discussion for the professionals, so talk with your attorney or your accountant for more detailed information about your specific situation. So, Next step, take action. This is your estate planning checklist. Meet with an estate planning attorney. This is not a do it yourself project. Draft or update your will to include your business assets.

Consider a revocable living trust to avoid probate. Set up a financial power of attorney to protect your business [00:10:00] operations. Review or create a buy sell agreement, especially if you have business partners. Next, get life insurance to secure your business and your family's financial future. Start a business succession plan to ensure a smooth transition.

And one final thought, estate planning is not just about debt, it's about protection. If you're an entrepreneur, estate planning is not optional, it's essential. It protects your family's financial future, your business operations. And, your employees and customers. Don't leave your hard work to chance. Meet with an estate planning attorney, a financial advisor, and an accountant to create a solid plan that secures your legacy.

If you found this episode helpful, subscribe to Law Days [00:11:00] and Lattes so you don't miss a single episode. And, please, please, please share this podcast with your friends, your business associates, and your family on your social media so that they can benefit from this information too. Trust me, they will thank you for it.

And if you have questions, send them my way. I'd love to answer them in future episodes. Until next time, my friends, stay fearless. Stay prepared and keep building your empire.

This podcast episode contains general information for discussion purposes only. Each case is different and must be judged on its own merits. Missouri rules generally prohibit lawyers from advertising that they specialize in particular areas of the law. This show should not be construed to suggest such specialization.

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