Building a startup remains a dream for many. After all, who can deny the appeal of working for oneself while shaking up the marketplace?
If all goes well, it is reasonable to expect that the business will far outlast the life of its creator. Thus, it is vital to have an estate plan that addresses corporate continuance.
Keeping taxes low
Paying as little as possible in taxes is a popular business tactic. This pursuit goes on even after the individual in charge passes away. Tax break Section 303 allows estates to redeem stocks at a favorable tax rate. Section 6166 grants significant tax deferrals that can keep operations afloat. Such advantages are well worth exploring.
Owning life insurance
Surviving partners often want to scoop up the remaining shares. The reason is that it prevents someone else from swooping in and instituting changes. To do this, they take out life insurance policies on one another, naming themselves as beneficiaries. The money is then available to buy out everything when the need arises. While this may seem unorthodox, it is a typical business practice.
Anticipating a successor
Many entrepreneurs want to pass their corporate creations down to a specific heir. Preparation is necessary to make sure the transition happens smoothly. Successors must receive explicit instructions on how the venture should run. Putting directives into an official document minimizes interpersonal conflicts and keeps everything fair.
Estate planning is not just for private wealth holders but also corporate leaders. Those in charge of any business should do their due diligence and prepare for the future.