Should I Update My Estate Plan When I Start My Own Business?

Starting a business can have significant implications for your estate plan, as it will likely affect your assets and liabilities, and potentially impact your family’s financial security in the future.

Here are a few ways that starting a business could affect your estate plan:

1. Reassess your assets: Starting a business may change your financial situation and the value of your estate. It is important to reassess your assets and determine how your business will fit into your estate plan. You may need to adjust your estate planning documents to account for any changes in your assets, liabilities, and income.

2. Consider business succession planning: If you plan to pass your business on to your heirs, you will need to consider how to structure your business succession plan. This may involve establishing a trust or creating a buy-sell agreement to transfer ownership of the business in the event of your death.

3. Update your will: Your will should reflect your current wishes for the distribution of your assets, including any business interests you may have. If you have not yet created a will, starting a business may make it even more important to do so.

4. Review your life insurance policies: If you have life insurance policies, you may need to review them to ensure that they provide sufficient coverage to protect your family’s financial future in the event of your death. You may also want to consider adding a business continuation rider to your policy to ensure that your business can continue to operate in the event of your death.

5. Consider the tax implications: Starting a business may have tax implications that you need to consider as part of your estate plan. Depending on the structure of your business, you may be subject to estate and gift taxes, as well as income taxes. You may want to consult with a tax professional to determine the best approach for minimizing your tax liability.

It is important to work with an experienced estate planning attorney to ensure that your estate plan reflects your wishes and protects your family’s financial future, taking into account any changes resulting from your business.