Personal Finance Essentials

Estate Planning and Your Exit Strategy

Every Exit Has a Price

Plan Yours Before Circumstances Plan It For You

EntrpreneurExitPlan

When Your Business Is Your Biggest Asset

For many entrepreneurs, the business they’ve built is their primary asset, and that creates a particular set of estate planning challenges. Your business is, by nature, illiquid. You can’t sell 10% of it to pay an estate tax bill the way you might sell shares of stock. If the business represents 50% or more of your net worth, certain estate tax provisions may apply, but they come with their own conditions and trade-offs.

One tax provision allows a larger exemption specifically for farm or business assets, but using it may mean foregoing other available exemptions, and the business must remain active within the family for a specified period after your death for the benefit to hold. The details are complex and change with tax law. What doesn’t change is the underlying problem: when your wealth is concentrated in a single illiquid asset, estate planning becomes critical, not optional.

Planning Your Exit

At some point, every business owner will exit their business — through retirement, sale, disability, or death. Most business owners think about this far too late, if at all. The time to plan your exit is now, not when you’re already preparing to leave.

Your exit strategy should account for all realistic scenarios: a planned retirement sale, an unexpected disability that prevents you from working, or your death while still active in the business. It should address what happens to your employees and your customers, not just your financial interests. Every business owner has obligations to the people who depend on them — and a well-crafted exit plan honors those obligations.

Your Will and Your Business

A will tells the world who gets what. For business owners, this document takes on additional importance. Your will can specify which assets should be sold — including the business itself — and which should be retained, who takes over operations, and how the transition should be handled. Without a will that explicitly addresses your business, your survivors may face enormous uncertainty and legal costs at precisely the moment when they are least equipped to handle them.