The federal estate tax in 2025 was record-high—each person can pass on around $14 million. But it is expected to drop significantly in 2026. So, if someone with substantial assets dies after the change, the government can tax that amount even before the heirs receive them. In other words, more family businesses are facing estate taxes and unexpected costs if they wait too long. You can avoid this by knowing what should be in your estate plan, especially if you have a business.
What to include in your business estate plan
A business-focused estate plan goes beyond a basic will. Key components include:
- A succession plan: Despite how crucial it is, only two-thirds of business owners have a will, which is one of the most important documents in succession planning. A well-planned process already identifies someone to take your place or manage your business when you retire. That includes training your successor, so they are ready no matter what happens.
- Updated trust structures: The kind of trust you are using should protect your business interests while minimizing tax exposure.
- Power of attorney: You should have a trusted person who can make decisions if you cannot.
- Buy-sell agreements: You should make ownership transitions clear, especially if you have partners.
- Asset protection: Do you have adequate insurance in place to shield the value of your business? You should have legal structures (like an LLC or a trust) to protect assets from lawsuits or creditors.
Each of these components can help protect your business, avoid confusion and prevent financial loss later.
Planning with family and retirement in mind
Estate planning means protecting your loved ones and your legacy. If you have young children, consider who would manage the business and care for them if you suddenly die. Are you planning to retire sooner? Consider whether to pass the business on or sell it to fund your retirement. If you have aging parents who own a business, encourage them to formalize their wishes now. Do not let them wait for a crisis before acting.
Preparing now makes you ready for any challenges in the future. And that can happen with honest communication.
Each business owner has unique priorities. That is why working with someone who takes the time to listen and understand you is important. An experienced estate planning attorney can make these complex processes simple and guide you every step of the way.