California is known for having complicated tax and business laws. This is all the more reason why individuals with assets in California should look into creating an estate plan. Proper estate planning can potentially reduce the amount of taxes you pay during your life as well as how much your children pay on their inheritances. Business owners who use an estate plan to pass on their business will also help the people who have to run the company.
Creating a succession plan
A succession plan is a document within an estate plan that provides for how a business will be run if the owner becomes incapacitated or dies. It may also address what should happen to the business when the owner retires. A succession plan can outline the steps for family members to take over the business, or it can direct others to sell the business or sell ownership in the business. Before creating a succession plan, company owners should consult with any co-owners and individuals who will be given responsibility in taking over, transferring or selling the business.
Insurance plans for successors and dependents
Whether or not you own a business, you can still help your dependents by taking out life and/or disability insurance. Life insurance will typically pay out when the policyholder passes away, and disability insurance can often be used if a person becomes incapacitated and is unable to work. If you do own a business, you may also want to look into key person insurance. This type of insurance can attach to a business and pay for certain business expenses if the owner dies or becomes incapacitated.
Other important documents in an estate plan
You may want to speak with an attorney about whether to include a will or a trust fund in your estate plan. A living trust can be used to assign a trustee to oversee assets on behalf of beneficiaries. You may also want to consider giving someone power of attorney over your financial and medical decisions in the event you become incapacitated.