In California, there are plenty of measures that business owners can take to protect their businesses and their eventual successors. For starters, business owners may be able to minimize taxes by setting up a trust fund, such as a grantor retained annuity trust or GRAT. GRATs allow owners to minimize the gift tax that their beneficiaries pay on their inheritance while still generating interest for the owners of the assets during their lives.
One estate planning document that can make things easier for business successors is a succession plan. These plans should specify whether the owner wants the business to be kept in the family if the owner becomes ill or dies or whether the owner wants someone else to transfer ownership interest or sell the business altogether. If an owner wants the business to stay within the family, the succession plan should identify the person who will be taking it over.
When estate planning, business owners should also explore options for insurance policies that can benefit their loved ones, such as life insurance and disability insurance. Key person insurance, which can designate a business as a beneficiary, is designed to pay out to whoever ends up running a business when the owner dies or becomes incapacitated. In addition to obtaining insurance, business owners should look into assigning someone power of attorney, which gives someone control of medical or financial decisions when the designator becomes mentally incapacitated.
The documents mentioned are just a few of those that may come into play in making an estate plan. For more guidance on insurance policies, tax minimization and passing business entities on to loved ones, individuals may want to consult with an estate planning attorney.