Estate Planning for Business Owners, Executives, and Professionals

For business owners and executives, estate planning can get complicated quickly. Your estate may include a business or ownership interest alongside investments, retirement accounts, real estate, and insurance. Deciding what happens to those assets also means considering what happens to the business you’ve spent years building.

A well-designed estate plan gives you a say in who receives your assets, who can make financial or medical decisions on your behalf, and how ownership of a business should transfer. It can also help you prepare for potential estate taxes and make the transition easier for the people who will eventually carry out your wishes.

Without an up-to-date plan, state law may determine how certain assets are distributed, and the result may be different from what you intended. Understanding the documents involved and how they work together is a good place to start.

Legal Terms Associated With Estate Planning

While designating beneficiaries and tax strategies are high-level concepts, the verbiage used throughout estate planning can create confusion if you don’t take the time to educate yourself. Here are a few common terms and definitions.

Power of attorney: A POA will act as an agent and make decisions on your behalf. You may want a healthcare power of attorney to make medical-related decisions when you’re unable. You can also appoint a financial power of attorney to make financial and business-related decisions.

While appointing a POA to make business decisions is smart, if you appointed your spouse as your POA, they will not be able to use business assets for their own benefit. This means your spouse cannot pay themselves in the same manner you would have. This is where a trust or will comes into play to transfer ownership.

Trust: A trust is a relationship between a trustor (or grantor), trustee, and beneficiary. The grantor puts assets into the trust and the trustee manages and oversees the assets. The trustee is obligated to act in a fiduciary manner. The primary goals of a trust are efficient transferring of assets to a beneficiary and to minimize taxes.

Will: A will communicates an individual’s wishes and aids in dispersing assets to beneficiaries upon their passing. There are varying forms and purposes for wills.

Estate: An estate is a sum of all wealth, assets, and property.

Taxes to Consider for an Estate Containing a Business

As a business owner, your estate will include the value of your business at the time of your passing. Estate taxes vary by state; if an estate tax applies, the sum of your estate includes the value of your business.

It’s important to understand that estate taxes come with thresholds. As your business grows, the tax implications may increase. As of January 1, 2026, estates valued over $15 million per person may be subject to federal estate taxes, with higher thresholds available for married couples through proper planning. At the state level, some states impose their own estate tax while others do not, and those thresholds can be significantly lower.

When it comes to your estate value, here are other points to remember:

• A life insurance payout is part of your taxable estate. Yes, insurance isn’t usually taxable for income taxes, but any insurance you own is estate taxable.
• If you designate a charity to receive a percentage of your estate, your state will conduct an appraisal to assure the charity receives the proper donation amount.
• Assets in retirement accounts are often taxed in the future when the beneficiary makes withdrawals and will be fully included in calculating your taxable estate, resulting in potential double taxation.

Minimizing taxes and estate planning go hand in hand. To get your wheels turning, here are two examples of tax-minimizing options for business owners:

• Utilizing a trust. In the case of an irrevocable trust, once a trustee places assets into the trust, those assets no longer belong to the individual’s estate. This decreases the trustor’s total estate value. Lowering one’s total estate value lowers their total estate tax (should one apply).
• Utilizing a family limited partnership (FLP). An FLP allows multiple family members to buy shares of the businesses. One goal is to preserve wealth over time to provide for future generations through tax-free transfers of assets.

Executives With Interest in the Business

Without proper planning, the State is left to determine how assets are dispersed. In this instance, ownership of the business often falls into the hands of a spouse or children. In reality, many want to pass their business on to a high-level executive or co-owner with an interest in the business. 

For this reason, many prepare a buy-sell agreement, which predetermines the passing of your business on to a new owner. This helps avoid the business inadvertently falling to a family member. 

Executives often receive compensation in forms other than a paycheck. This means the terms of the agreement need to be clear and regularly reviewed. Businesses and relationships evolve; you want your buy-sell agreement to remain fair and current.

Another common scenario is when a business owner wants ownership to remain within the family, but the family member is not best suited to handle day-to-day operations. In this instance, you can declare ownership to one individual and management responsibilities to another.

You put countless hours and resources into your business, so it needs to live on in a manner which best honors you. Whatever the situation may be, you want to have confidence you’re setting up future operations for success. 

Estate Planning With The Rosamond Financial Group

Your business adds another layer to estate planning, especially when its value, ownership, and future operations are tied closely to your personal finances. A plan created years ago may also need to change as your business grows or your family circumstances evolve.

At The Rosamond Financial Group, we help business owners and executives look at how their business fits into their broader financial plan. We can work alongside your estate planning attorney and tax professional to help you understand the financial implications of your choices and keep your plan aligned with what you want for your family and your business.

To get in touch, call my office at 830-798-9400 or email solutions@rosamondfinancialgroup.com. I look forward to speaking with you soon.

About Preston

Preston Rosamond is a wealth manager and the founder of The Rosamond Financial Group Wealth Management, LLC with over two decades of industry experience. He provides comprehensive wealth management and financial services to successful business owners, corporate executives, and affluent retirees who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch, a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing solutions@rosamondfinancialgroup.com or schedule a call on his online calendar.