Though Texas has relatively favorable estate tax laws, estate planning is still important to help ensure that the intended individuals receive the property or assets that are left to them. Estate planning is also good for business owners since it can set forth what will happen to the business if the owner becomes incapacitated or dies.
One document in an estate plan, known as a succession plan, can be used to identify the person who will take over a business or who will transfer or sell the business after the owner passes away. A succession plan should clearly state whether the owner wants the business to be closed, transferred, sold, or passed on to a friend or family member.
Key person insurance helps provide for whomever will be taking over the business if the owner becomes incapacitated or dies. Key person insurance that names a business as a beneficiary can pay out for some business expenses.
Whether or not someone owns a business, it is a good idea to think about designating someone to have power of attorney over medical or financial decisions if a person becomes mentally incapacitated. Similarly, an advance healthcare directive spells out a person’s wishes regarding medical treatment in end-of-life situations.
Someone creating an estate plan should also consider getting life or disability insurance to protect dependents. Estate planning may also entail setting up a trust fund in a way that protects beneficiaries from having to pay certain taxes (apart from estate taxes). An estate planning attorney can help clients determine whether to set up a trust fund or to draft a will, and they can help clients figure out the type of trust fund, such as revocable or irrevocable, that will meet their needs.