You should discuss your unique personal situation with an estate planning attorney to gain insight into the options that are available to you. Unfortunately, there are people that conform to constraints that they apply to themselves unnecessarily because they are not aware of alternative approaches.
With the above in mind, in this post, we will look at a widely embraced solution for small business owners that face inheritance balancing situations.
Keeping It Fair
To explain by way of example, let’s say that you are a chef and you own a restaurant that has become exceedingly popular over a period of decades. It has been featured on television shows and in magazines, and the property itself is positioned in a very desirable area where real estate is extremely expensive.
Your son went to culinary and restaurant management schools, and he is almost as highly acclaimed as you are within the industry. He has earned the right to continue to operate the business on his own after you pass away, and you are completely resonant with this idea.
Everyone who has ever been in the business is well aware of the fact it takes all of your time and then some to operate a restaurant. All of your energies have been poured into the operation, and the same can be said for your son. Outside of the restaurant, your resources are adequate, but not extraordinary, because you have always reinvested in the business.
You are a widower and you have one other child, a daughter that went to college to become a teacher. She greatly enjoys this very gratifying career helping students achieve their full potential. While you love each of your children equally, leaving the restaurant to your son is a no-brainer. What do you do under these circumstances?
Someone may say that you could give your daughter an ownership share in the restaurant, but she knows nothing about the business, and it could cause acrimony between the siblings. She would also have the ability to sell her share whenever she chose to do so, and this could further muddy the waters.
Under these circumstances, you could use life insurance to balance the inheritances. After you estimate the value of the business that you will be leaving to your son, you could take out an insurance policy on your life that is equal to that amount and make your daughter the beneficiary.
Clearly, the premiums would be rather expensive, but you could choose to utilize profits from the business to make the payments, because it could be argued that the ongoing income that is generated by the business is part of your legacy.
Schedule a Consultation
Personalized attention is key when you are devising your estate plan, because every situation is different. If you make decisions on your own without the benefit of legal counsel, you can make mistakes that yield negative consequences.
Many people know that action is required, but they take pause because they are uncomfortable discussing personal and financial matters with an attorney that they have just met. This is understandable, but you can rest assured that we will put you at ease from the first moment that you walk through our doors.
We got into this area of the law because we want to help families manage difficult circumstances that we all must face eventually. When you consult with our firm, your attorney will listen carefully, gain an understanding of your situation, and explain your options to you.
Ultimately, you can make a fully informed decision, and we will help you devise a plan if you decide to go forward. If you are ready to set the wheels in motion, we can be reached by phone at 310-337-7696, and you can alternately send us a message through the contact form on this website.
- Common Ways to Include Charitable Gifts in Your Estate Plan - January 24, 2022
- Can I Be the Trustee of the Trust I Establish? - January 19, 2022
- What Is the Most Important Estate Planning Document? - January 18, 2022