Long-term financial planning is important for all serious minded individuals.  If you want to be able to provide your children with opportunities for higher education and then subsequently have the resources that you need to retire in comfort you have to plan ahead intelligently.

If you just go forward groping in the dark step-by-step you may find yourself in a difficult position later on in your life.  Along the way you may not be able to provide for your children in the manner that you would like to.

The decisions that you make today are going to impact your future, and if you make them without any particular long-term strategy in mind you may be on a road to nowhere.

The above is true for people who are employees of a company and it is also true for small business owners.  In addition to having a business plan that leads to profitability, you should also consider how you’re going to exit the business.

Some people intend to leave their business to the next generation of the family while others intend to sell the business.  Some businesses are driven by the specific talents of the owner and won’t really have much value when the owner passes away.  Exactly how you go about things along the way is going to depend on your unique situation and your personal intentions.

If you are tired of going through life without a plan, right now would be a good time to sit down and discuss your future with an experienced, savvy Indianapolis financial planning attorney.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

Buy-sell agreements are often used by partners in small businesses who are engaged in succession planning, and they can provide a solution to a rather challenging situation.

If you are a partner in a small business you may find that your share is your most significant financial asset.  But you probably don’t want to give this asset in its entirety to just one of your heirs.

So how do you make it liquid so that you can spread it to multiple family members without forcing them to sell it to the highest bidder?  Plus, if they were to sell it the remaining partner or partners would be forced to deal with the result of the sale without having any input and this is another thing to consider.

This is where buy-sell agreements come in.  With what is called the cross purchase plan the partners come together and decide on the value of the business shares.  Every partner takes out an insurance policy on each one of the other partners.  The combination of the policies will equal the agreed-upon value of a share in the business.

When one of the partners passes away, the surviving partners will receive the proceeds from the insurance policies.  According to the terms of the buy-sell agreement that they all entered into they will then pool this money and use it to purchase the business share that was owned by the deceased partner from his or her estate.

If you are interested in learning more about buy-sell agreements, pick up the phone right now and make an appointment to speak with an Indianapolis estate planning lawyer who has a background in small business succession planning.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

The correct approach to estate planning is something that is going to vary on a case by case basis depending on your unique situation, and with this in mind, let’s take a look at succession planning for small business partners.  If you are a partner in a small business your financial share in the business may represent the largest asset that you have.  When you pass away your partners are probably still going to want to remain in business, and it is likely that you feel the same way with regard to the passing of any of your partners.

If your family was to inherit your share of the business they may want to sell it, and the buyer may not be someone who has the best interests of your partners in mind.  Even if the buyer was well-intentioned, it is likely that the surviving partners would want to maintain control of deciding who owns a share of their business.

With this in mind, the way that small business succession is usually handled is through the creation of buy-sell agreements.  The two such agreements that we will take a glance at here are the cross purchase plan and the entity plan.  With the cross purchase plan each partner takes out an insurance policy on every other.  When one of them dies, the insurance company proceeds are used to purchase that share from the estate of the deceased.  Under the entity plan the business itself buys insurance on all the co-owners, and when one of them passes away the policy benefits are used to purchase the share of the deceased partner from his or her family.

The partners in the small business will have to get together and work out the details of the agreement which is going to include evaluating each respective share and working up a binding contract.  This is clearly a matter that is going to require legal expertise.  So, if you are interested in creating a buy-sell agreement, the first step would be to arrange for consultation with an experienced estate planning attorney who has a background in small business succession planning.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.

When my clients talk about starting a small business, they see that business as a means to several ends.

If profitable, it will give them the ability to increase their income and support the lifestyle they want. It also allows them a freedom they just can’t find anywhere else – to be their own boss and call their own shots.

But all of this pales in comparison to one of the biggest dreams that small business supports, and that is the ability to build a legacy that they can leave to their children and beyond.

Now, that’s the romantic side of building a family business. But for those grand visions to actually happen, we need to take a look at the practical side of small business planning.

First and foremost, you’ll want to designate an heir to your business. Depending on your circumstances, this can be simple or not so simple at all. If you have multiple heirs, you can divide your business equally among them, but only if you’re sure they can run the business effectively together. If not, you’ll have to consider how to ensure all your children benefit from the family business without tearing the business apart in the process.

If there are no family members to designate as heirs, you’ll need to look at other options like your most trusted employees, other businesses or even charities. In any event, these can be complicated decisions and require a considerable amount of planning, discussion and tact.

If your business is a partnership with someone outside the family, you’ll want to ensure that your heirs can inherit your half of the business and have the ability to buy out your partner if that is the agreement you’ve set up. This can typically be done with proceeds from a life insurance policy, however you may alternatively want to designate your partners as the beneficiary on your policy, allowing them to buy out your shares from family members.

In either scenario, you’ll want to create a Buy-Sell agreement that outlines the process for distributing interests in the business when one of the partners becomes incapacitated or passes away. The agreement stipulates the sale price of the share, whether you want the heirs to sell the portion, whether you do not want an individual to buy out your share, the share of each partner and other related options.

And, as with any kind of estate, there are usually taxes to be paid when someone dies. A good estate planning attorney can help you minimize those taxes to ensure that the majority of your interest in the business passes to your heirs or your partners tax-free.

Frank & Kraft, Attorneys at Law is a member of the American Academy of Estate Planning Attorneys.