Enriching Life Through Innovative Ideas SM



Estate planning for small businesses is essential in order for the business to survive after the death of the owner. It is important to make plans for your business to ensure its continued growth and success. To ensure that a business does not die along with the owner, there are certain strategies a business owner should consider.

Estate Tax

One benefit of planning your business estate is the ability to minimize the amount of estate taxes the business will need to pay. Estate tax, also known as death tax, normally ranges from 35% to 50% of the business assets and is due within 9 months after death. One IRS tax break that many heirs take advantage of to cover estate tax is Section 303. This allows your estate to redeem your stocks with a very small tax cost. In order to use this method, the stock value must be more than 35% of the estate. Section 303 is a one-time opportunity that can help cover estate taxes. Another option for business owners who do not want their business to be passed on is to document their intent to terminate the business upon their death. With this document, the business will not be transferred to heirs upon death and it will be dissolved. Paying estate tax will be avoided because tax cannot be paid on a company that no longer exists.

Most business assets are not liquid, meaning these assets cannot easily be converted into cash. As a result, paying off death tax often results in selling the business, which would effectively kill the company. Estate planning can prevent this from happening. In many cases, business owners purchase life insurance policy that would cover the estate tax. Doing this will also provide surviving owners an opportunity to continue the business.

Buy-Sell Agreement

Making a buy-sell agreement between shareholders or partners establishes a plan for the business in case one of the owners dies. A buy-sell agreement is a contract that establishes a sale price for the business and your share of the business. You can document what you will allow to happen to your business, for example, whether if your business partners are allowed to buy your shares, or if you want to block certain people from having a role in the business.

The document will also state if you want your heirs to sell your portion on the company. Since the business price was already established in the document, it will reduce potential confusion or conflict for your heirs.

Sole Proprietorship

A sole proprietorship is a type of business entity that is run by one owner with no legal distinction between the owner and the business. If you are a sole proprietor, it is even more important that you carefully plan out what will happen to your business after you pass away. One benefit as a sole proprietor is that personal assets can be used for business debts. If you do not take the necessary precautions to protect your business, it may be dissolved after your death.

Heirs to a Business

In a family run enterprise, the business owner will need to decide exactly how much each heir receives or if each heir gets an equal part. Inform your successors as soon as possible and prepare them to take over your business. In the case that an heir does not want to take over the business or you would like them to sell your business, do research and provide specific instructions on the sale process.

If a business owner dies without a plan, the successors are left with no direction as to how to maintain the business. Estate planning will help ease the transition process for the heirs of a company and provide directions for them to run the company in the way the business owner envisioned.

FindLaw Network

What Our Clients Say

Starting a new business can be a bit scary. Aside from worries of failure, there’s also the hassle of making sure all legal paperwork are properly filed. I reached out to Mr. Wang (Tommy) because of his excellent reviews and reputation and I am so glad I did. He was thorough and meticulous in answering all of my concerns and took time to find out special laws and policies regarding the kind of business I am starting. I could focus on the daily practical side of starting my new office without worry because I felt Tommy was reliable and took my case seriously. My business is opened and it’s all been a smooth start because of Tommy’s help. I have plans to start another business venture in the next few years and I already know I’ll be coming back to Wang IP Law.

The Shindig W.

I came to Tommy for help reviewing a licensing agreement I had secured with a well-known manufacturer. Tommy made sure I understood all the details in the contract and he negotiated with the company to improve my side of the deal. I mentioned to Tommy at my first consultation that we were looking to expand throughout the US and were investing a lot of money to make a big entrance into the market. I did not think I would have my store open so soon but Tommy also has connections with the local area and realtors to help me secure the location for my first store in the Los Angeles area. Tommy works a lot with the local businesses and he understands how to transition from the Asian market to US market. Within 8 months my store was open for business and fully operating. I must recommend Tommy to any business owners looking for help with contracts and improving their side of the deal. Tommy has the knowledge and experience to make sure there is a smooth process to open for business here, and make sure that your company is set up for success.


I think Tommy and his team by far considered the best people to work with in my 16 business years. Beside quick responses to all my inquiries, they also done things right and providing very professional solutions. I’m highly recommending Tommy and his firm to all business owners.

Calvin C.

I have been working on my Utility Patent for almost 4 years. I have hired and fired two very reputable IP firms because with all their expertise and reputation for being some of the top firms in IP Law, I felt a lack of connection and care in my product, time and financial investment. Then I found Tommy and his team. Tommy does not waste time. He and his team are professional and extremely thorough. After 4 years, I finally found a legal team that I felt spent the time to really understand the components of my utility patent. Tommy also very mindful of cost and how and where my money would be better spent. I really feel I am in great hands with Tommy and his team. They have been patient with my revisions. And most importantly, they made me feel that they fully understood the importance this patent is to me. It has been a great and comforting pleasure working with Tommy.


Read All