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The Fearless Advisor! Estate Planning for Business Owners | F5 Financial is a fee only wealth management firm with a holistic approach to financial planning, personal goals, and behavioral change.

Estate Planning for Business Owners

Business owners: Is your family, wealth, and legacy protected? Today I discuss the 4 key areas your estate planning must cover.

(Video is 4 minutes. The full transcript is below.)

Full Transcript of video

Hey friends, the Fearless Advisor here. Today I am going to discuss estate planning for business owners.

If you’re a business owner, you know that building a business is all about taking risk.

You put your belief in yourself, invest your money, give your time to create something that can grow and succeed.

We know that your business will fund your retirement plan, and potentially create a multi-generational family enterprise, but there's one area of risk you shouldn't be taking:

  • That’s your estate plan.

Generally, it’s a conversation we have often with our entrepreneurial clients.

And most of the time—it’s not top of mind.

But your estate plan is critical. It needs to cover your wealth and safeguard your family. It also needs to ensure that the business can carry a plan for a sale or wind-down.

So, what can you do? Let’s get into it.

First things first, start with the foundational documents.

At a minimum, you'll need a will, a power of attorney, and a healthcare directive.

These documents appoint someone to manage your finances if you are incapacitated and to make healthcare decisions for you.

Additionally, particularly if you have minor children, wills are a standard estate-planning document, and in some cases, trusts can come into play.

Trusts are more flexible than wills, and they are not subject to probate. This means you can save time and money and avoid public disclosure of assets. Trusts can also be set up so that children receive an inheritance in a way that is best for them.

Second, plan for tax efficiency.

Estate planning is meant to be long-term and forward-looking.

It's impossible to predict what future tax laws may be with any accuracy, as they are tied to the political climate at both the state and the federal level.

So, it's a good idea to build tax efficiency into your plan at every stage.

That may mean creating multiple trusts, managing a business 401(k) plan or cash balance plan, and planning how heirs will pay taxes on inherited property.

Inheriting a business without the means to pay the taxes due would cause an immediate cash crisis.

Third, plan for a family succession.

If you intend for your children to inherit the business, it’s best to have a succession document in place.

This can’t go ignored—especially if you have more than one child.

Creating a mechanism for dividing ownership while preserving the decision-making powers of whoever will be the chief executive is critical.

Finally, create a buy-sell agreement.

If you have multiple partners and want to avoid disruption, it's best to get a buy-sell agreement in place.

A buy-sell agreement grants existing owners the right to buy out the exiting owner's share of the business using a pre-set valuation formula.

It’s the most optimal way to protect you—and those around you—as you’re thinking about your exit plan.

At the end of the day, there's a lot more to a successful estate plan, but some of it is included in your day-to-day business planning.

If you intend to have a multi-generational business, then planning to incorporate family members, providing training opportunities, and handing over the reins should also be an ongoing process.

If you are a business owner and would like to discuss estate planning, reach out to us here at F5 Financial Planning. Thanks for joining us!


Photo credit: Jessica Rockowitz on

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F5 Financial is a fee-only wealth management firm with a holistic approach to financial planning, personal goals, and behavioral change. Through our F5 Process, we provide insight and tailored strategies that inspire and equip our clients to enjoy a life of significance and financial freedom.

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Josh Duncan

Josh Duncan

Josh Duncan is a trusted Financial Advisor with F5 Financial. He writes about a variety of financial topics and insights. Read his articles here.