Estate Planning and Your Web Design Business

It can be difficult to think about estate planning when you’re working hard on a daily basis to keep your web design business running and profitable. External and internal pressures are always present, and you have to acknowledge that and allocate time to work on your long term goals. One of those goals should be to protect and preserve your business assets and income for your beneficiaries, such as your spouse or children. You can do that through proper estate planning.

Write a Will

The first item you’ll need for estate planning is a written will. There are so many free and cheap templates and samples available, that there is really no excuse not to have one. If you don’t write how you want your assets to be disposed, then the probate courts will do it how it sees fit. For example, if your dream is to have your children take over your business or give them the option to sell your assets to pay for their living expenses, you need to write that in a will. Don’t rely on inheritance laws to give you the outcome you want. A probate court judge may end up giving away your business assets to other beneficiaries while still complying with state laws. You should avoid handwritten wills because they can lead to extensive legal battles, and some states do not recognize them as valid.

Create a Trust

If your web design business is tied up in probate court, then your beneficiaries may not be able to do much to sustain it until the legal process is complete. That can have a detrimental effect on the business, and creating a trust is one way to avoid the need to go to probate court. The trust allows you to hold your business assets on behalf of your beneficiaries. When you die, the assets are not considered a part of your estate. They will be distributed to your beneficiaries, or your web business will be transferred to them, the way you describe in a written trust agreement. Your beneficiaries do not get to own the trust until you die, and you can determine when they receive assets. You can create a living trust now, or a testamentary trust which begins upon death.

Give Gifts

Estate taxes can take a toll on your web design business. Federal tax laws can lead to a significant reduction in what your beneficiaries will be left with after probate. You can reduce your estate taxes by giving gifts to your beneficiaries while you’re still alive. According to gift tax laws, you can give up to a certain amount without triggering a gift tax. For example, you could give a gift up to $12,000 in 2011 to a beneficiary without paying a gift tax. The amount changes from time to time, but you can check the IRS website for the most up to date information.

Consult with an estate planning attorney about the needs of your web design business. It would be painful to the ones you leave behind to work so hard at building a business, only to lose some or all of it in the probate process.