As an owner of a small business, you may be concerned about accurately estimating yourestate value while drafting your estate planning documents. Even though tradition dictates that the heirs to a small business often suffer from a variety of legal and tax headaches, you can avoid that misery by taking the time to plan ahead. Estate planning for your small business allows you to provide for your family while making sure that assets are appropriately distributed. If you choose to forego an estate plan, your estate could end up in probate, which could decrease the value of the business.

A common provision in business owners’ wills allows for a buy-sell relationship with another person. That is, if the owner dies, another person is named as the head of the business. Transfer of ownership can also be arranged in the event of incapacitation or if the owner simply chooses to leave the business. This clause will include information about the amount of money required to purchase the owner’s stake in the business, along with contingencies for events that could trigger a buyout of the company.

Practical planning for transferring your business requires you to lay out a specific set of instructions for your spouse or closest surviving heir. This person should have access to critical documents, but he or she should also be able to access the facilities themselves with a key or passcode. Make a contact list with critical information for your spouse or heir, including on that list your attorney and critical employees. Your estate plan should include a designation for an individual who can write checks after you die in order to keep the business functional.

Every estate has different needs, and every estate owner has different preferences. As a small business owner, you should acknowledge the need to speak with a qualified probate attorney to help you figure out the best strategy for your assets and holdings after death. An experienced attorney can help you learn more about your legal and financial options before it is too late.

Luis E. Barreto