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Published February 27, 2020
A weekly look at issues facing Wyoming business owners and entrepreneurs from the Wyoming Small Business Development Center (SBDC) Network, a collection of business assistance programs at the University of Wyoming.
By Jessica Schneider, attorney, Hirst Applegate LLP (guest author)
Successful businesses are the result of years of hard work, determination and sacrifice by business owners and their families. As such, most business owners want to preserve the product of their hard work for the benefit of their families and loved ones after they’re gone. They also want to ensure their business does not falter or fail after their retirement or death, if the business can remain viable. Proper estate planning can help achieve both goals.
-- Estate planning. In its simplest form, estate planning is the process of executing documents and designating agents to manage and transfer an individual’s assets in the event of his or her incapacity or death. Common estate planning documents include wills, trusts, financial powers of attorney and health care powers of attorney. For business owners, the estate planning process also should include analyzing and taking appropriate action regarding the individual’s business interest(s).
-- Probate. The term “probate” refers to a process that occurs after the death of an individual. The “probate process” typically involves a deceased individual’s agent, known as a personal representative or executor, filing a lawsuit to be granted court authority to gather and distribute the deceased individual’s assets, including the individual’s business assets. The probate process can often be very expensive and time consuming. As such, most estate plans include documents and actions that seek to avoid probate.
-- Transitioning business ownership. Typically, an individual’s business interest(s) can be transferred to another person or entity, either during life or at death. Proper estate planning can utilize the transferability of an ownership interest to avoid probate; transfer ownership to the owner’s family or others (for example, a key employee); account for the financial needs of the owner during his or her life; provide for the continued operation and management of the business; and designate who will benefit from the business interest, or the proceeds of the ownership interest if the interest or business is liquidated, in the event of the owner’s incapacity or death.
-- Tax consequences. The sale or transfer of a business interest can generate unwanted tax consequences, such as capital gains or losses and unexpected income. A proper estate plan can account for such tax consequences and seek to limit them.
-- Help with estate planning for business owners. If you would like to learn more about estate planning for business owners, contact your local Wyoming SBDC Network adviser for no-cost, confidential assistance.
You also may want to join our upcoming March 5 webinar, “Estate Planning for the Small-Business Owner,” where these issues will be addressed in more detail.
Schneider is an attorney with Hirst Applegate LLP in Cheyenne and will present the webinar. Her practice focuses on real estate planning, estate administration, trust administration, creditors’ rights, banking real estate and business law. Schneider graduated from the UW College of Law in 2008.
For more information or to receive no-cost assistance now, you can contact your local Procurement Technical Assistance Center or Wyoming SBDC Network adviser at www.wyomingsbdc.org/sign-up.
The Wyoming SBDC Network offers no-cost advising and technical assistance to help Wyoming entrepreneurs think about, launch, grow, reinvent or exit their business. In 2019 alone, the Wyoming SBDC Network helped Wyoming entrepreneurs start 108 new businesses, create or save 3,402 jobs; and bring a capital impact of more than $24 million to the state. The Wyoming SBDC Network is hosted by UW with state funds from the Wyoming Business Council and funded, in part, through a cooperative agreement with the U.S. Small Business Administration (SBA).
To ask a question, call 1-800-348-5194, email firstname.lastname@example.org, or write 1000 E. University Ave., Dept. 3922, Laramie, WY 82071-3922.
All opinions, conclusions and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.