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Small Business Estate Planning 101

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Yorkville Business Estate Planning Attorney

Yorkville Estate Planning Lawyer for Small Business Estate Planning

Owners of small to medium-sized enterprises and their families, especially those which generate high income and have a high net worth, need estate planning, known as Business Estate Planning. It is vital for households in Yorkville, Oswego, Plainfield and other nearby Kendall County, Illinois, regions.

Asset management and thorough estate planning create a solid legal foundation for protecting against death and incapacity and safeguarding personal and company assets against potential threats. 

Estate Planning Factors for Yorkville Business Owners

Steps for planning 

Creating an estate plan for you as a business owner necessitates careful evaluation and preparation of various things, including assets, goals, and even your family structure, and how that may give rise to possible conflicts. Therefore, attorneys must examine multiple factors when creating an estate plan.

A risk assessment, an examination of your assets and the possible legal threats that might affect your financial stability and retirement plans, can be viewed as three parts:

  • It is essential to pinpoint your personal and commercial assets, such as business holdings, individual property, investment properties, and financial accounts. This aids in identifying existing vulnerabilities. 

  • Thorough interviews of you and your loved ones are required to detect possible dangers to your assets, such as litigation, creditor worries, or economic decline. 

  • Identifying your goals and objectives is crucial, including evaluating your family structure to look for any conflicts that may arise, such as stepchildren or blended family issues. 

Developing asset management measures are based on the results of the risk assessment. These involve using legal organizations like trusts or limited liability companies to protect assets from potential litigation.

Other key aspects include:

  • providing advice regarding insurance gaps, 

  • helping you plan your taxes, and 

  • Vetting any employee contracts, NDAs, non-competes, etc., to protect all essential business strategies and trade secrets.

The business estate planning attorneys at Peace of Mind Asset Protection, LLC, are experienced in dealing with complex business estate matters, ensuring that all your needs are prioritized and handled with utmost care to secure your and your family‚Äôs future.  

Essential documents for planning 

Some essential documents are critical to any business estate plan, whether your business is in Plainfield or other neighboring Kendall County cities. These documents include the following:

1. Living Trusts 

A Living Trust is a legal instrument that lays out your objectives and legacies. You or you and your spouse establish a Living Trust and name a trustee or co-trustee to monitor and administer financial assets. This is similar to forming a Limited Liability Company or Corporation with a management team to oversee day-to-day activities. Think of it as a roadmap for life with a contingency plan that outlines who will inherit your hard-earned personal and business assets.

Furthermore, a will is simply a legal document that addresses the subject of wealth distribution following death. At the same time, a Living trust ensures a smooth transition in the event of financial disability. 

2. Power of Attorney

An estate planning attorney can help you and your family create "financial power of attorney." A financial power of attorney is a legal instrument that permits a person, known as the "principal," to designate another person, known as "the agent" or "attorney-in-fact," to handle their financial arrangements if they develop disabilities or are otherwise unable to carry out their daily affairs independently. 

Being designated as an "attorney-in-fact" does not provide the right to practice law; a licensed attorney will be needed to handle that and many other crucial economic matters, such as:

  • make checking deposits, 

  • dissolve banking accounts, and 

  • sell real estate.

The financial power of attorney is vital because it enables you to plan for the risk of disability by guaranteeing that somebody you trust can handle the finances if you become incapable due to sickness, accident, or old age. 

Without a financial power of attorney for property and other economic decisions, a court process known as guardianship may be required, which limits your liberty and forces the court to authorize someone to handle the financial decision-making. In a financial emergency, the financial power of attorney saves you thousands of dollars in attorney expenditures and court costs. 

Aside from the monetary considerations, this legal tool ensures flexibility in decision-making and prevents future family conflicts by pre-designating who has the authority.

In essence, a financial power of attorney creates a plan to reduce risks, as well as a strategy to solve financial problems in the case of incapacity; therefore, it also decreases the legal dangers of disability while establishing a practical and robust strategy for designating attorneys in fact and other substitutes.

Strategies for Life Insurance and Taxes

For high-income families, life insurance is a great resource, replacing an individual's or family's earnings in the event of death. Estate tax planning is about structuring a person's wealth to minimize the sum of estate taxes owing upon their unfortunate demise.

In Plainfield and other parts of Kendall County, Illinois, estates worth more than $4 million are subject to the Estate Tax. The tax rate is graduated, with a peak rate of 16%. As a result, life insurance can be a substantial asset that may force a person's relatives into a taxed estate in Illinois. This is where an Irrevocable Life Insurance Trust, or "ILIT," comes in handy. An ILIT is a form of trust utilized to hold a life insurance policy on behalf of the trust's beneficiaries. The trust is "irrevocable" because, once established, the person who founded the trust, the Grantor, cannot amend the trust's provisions or withdraw assets deposited in the trust.

The utilization of exemptions and exclusions in Plainfield and other areas of Kendall County, Illinois, may lower the taxable value of an estate. The estate tax, for example, does not extend to transfers to a surviving spouse or non-profit organization. Moreover, estate tax planning uses trusts to tax-free transfer your family's wealth to loved ones.

When you die, your properties must undergo probate before being dispersed to the recipients. Once the life Insurance policy is placed in an ILIT, the proceeds from the policy will be paid directly to the trust, which will subsequently distribute the proceeds to the recipients under the conditions of the trust deed. 

Also, as mentioned before, if your estate surpasses the appropriate estate tax allowance, your beneficiaries may be required to pay estate taxes on the extra amount. By putting a life insurance policy in an ILIT, the death benefit can be utilized to pay estate taxes or, better yet, to avoid estate taxes together by keeping the life insurance asset out of the estate. 

The ILIT can also be set up so that specialists are selected to manage the trust and safeguard the recipients from:

  • inexperience, 

  • immaturity, or 

  • lack of financial competence.

Contact a Yorkville Business Estate Planning Attorney Today

Peace of Mind Asset Protection, LLC focuses on estate and business planning for business owners like you and your family. To position your assets attractively, high-net-worth and high-income households require extensive planning that includes using trusts, limited liability companies, and other liability-reducing methods, as explained above. 

 

Placing your real estate, commercial holdings, and other assets comfortably can significantly decrease or eliminate legal concerns. Contact a business estate planning attorney servicing Plainfield by calling 630-882-2467 or using our online contact form, and an attorney or member of our staff will contact you to schedule your first consultation.

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