Planning for Business Owners: What Trust and Estate Professionals Must Consider

Self-employed individuals present a distinctive set of estate planning challenges and responsibilities. Often the sole architect of both strategy and operations, a business owner’s death or incapacitation can threaten the continuity of the entire enterprise. For estate and trust professionals, this reality demands a holistic approach to estate planning; one that extends beyond asset distribution to encompass succession, governance, tax planning, and long-term business viability.

The Clock Is Ticking on Key Tax Provisions

A critical consideration for 2025 is the scheduled sunset of the Tax Cuts and Jobs Act (TCJA). Without legislative intervention, the federal estate and gift tax exemption, currently $13.61 million per individual, may revert to pre-2018 levels by the end of next year. For married couples, that could mean a reduction from over $27 million in exempt assets to approximately $14 million.

This narrowing window underscores the urgency of strategic planning. Lifetime transfers, irrevocable trusts, and other tax-efficient mechanisms can still be leveraged, provided action is taken before year-end. Advisors should also revisit entity structures and business continuity documents in light of recent legal developments (e.g., the Connelly v. United States decision) that may affect how life insurance proceeds are treated in buy-sell agreements.

Key Focus Areas for Advising Business Owners

1. Succession Planning: A Cornerstone of Continuity

Without a clear succession plan, a self-employed client’s sudden absence can bring operations to a halt. Professionals should guide clients through defining:

• A successor with the authority and preparedness to lead
• Contingency leadership in the event of incapacity
• Buy-sell provisions and triggers for ownership transfer
• The availability of liquidity to support operations or a potential sale

These conversations should be documented, regularly revisited, and reflected across business and estate planning instruments.

2. Trust Structures: Mitigating Probate, Preserving Privacy

Probate delays can have serious implications when business decisions require immediacy. In most jurisdictions, revocable trusts allow assets to pass outside of probate, preserving confidentiality and enabling more seamless transitions.

However, trusts must be structured with attention to business operations. For example, if ownership shares are held in trust, underlying agreements, such as operating or shareholder agreements, should not conflict with trust terms or create inadvertent defaults under financing arrangements.

3. Legal Entities and Liability Exposure

Entity selection carries long-term planning consequences. Professionals should periodically assess whether an existing business structure still meets the client’s objectives. Key considerations include:

• Shielding personal assets from business liabilities
• Facilitating multi-generational ownership transfer
• Navigating restrictions for trust ownership in S corporations
• Mitigating exposure from personal legal actions or divorces

Clients with real estate holdings face additional planning layers. Asset volatility, cross-jurisdictional probate rules, and complex debt structures all increase the need for thoughtful legal architecture.

4. “Stress Testing” the Plan

Estate planning documents are only as strong as their execution. Advisors should conduct routine reviews that simulate various triggering events (e.g. illness, incapacity, death, or business sale) to expose vulnerabilities. This includes reviewing:

• Operating agreements and shareholder contracts for consistency
• Valuation methods for fairness and applicability
• Appointment of fiduciaries, beneficiaries, and powers of attorney
• Physical and digital document organization, including original titles, insurance records, and prior gifting documentation

A proactive review can prevent critical delays when timing matters most.

Planning as a Team Effort

Effective estate strategies for self-employed clients rarely exist in a vacuum. They require coordination across legal, financial, tax, and operational teams. Estate planners should engage early with a client’s broader advisory team to ensure cohesive execution and minimize risk.

For clients preparing for a business sale, estate professionals often operate behind the scenes, clarifying trust structures for M&A counsel, preparing certificates of trust, and flagging post-sale updates to the estate plan. Equity transferred prior to a letter of intent may offer greater tax efficiencies, including valuation discounts and more flexible planning options.

Your Value as Their Advisor

Unlike employees, self-employed individuals must independently manage retirement savings, disability insurance, and liquidity reserves. This reality places even greater weight on estate planning, not just to protect wealth but also to protect the enterprise that generates it.

As tax law shifts and markets evolve, trust and estate professionals have a unique opportunity to help clients reinforce the foundations of their personal and professional legacy.

Supporting Legal Professionals With Confidence and Precision

With careful planning, trust and estate professionals can guide their business owner clients through the often complex landscape of succession and estate planning. For legal professionals who are working through complex estate planning scenarios or require trusted support for probate administration, we’re here to help.

Since 1967, HeirSearch has partnered with legal and trust professionals to resolve heirship matters efficiently and ethically. Our forensic genealogy experts locate missing or unknown heirs with a 97% success rate, offering transparent, non-percentage-based fees.

Contact us to learn more about our process and to receive a no-cost, no-obligation quote.

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