Estate planning considerations after a business sale

A business sale marks a significant financial and personal life milestone. As such, it’s a perfect time to reevaluate your estate plan. Selling a business interest brings newfound liquidity and notable changes in your financial situation.

Your estate plan should always align with your current circumstances. Reviewing and updating your plan helps protect your new assets and ensure they go to your intended beneficiaries.

What you need to review after a business sale

After selling a business interest, several factors require your attention to secure your future:

• Tax planning: A business sale can result in significant capital gains, which may lead to hefty tax bills. Planning can help minimize your tax burden. Consider meeting with a professional advisor to explore options and solutions tailored to your situation.
• Asset protection: Protecting your assets becomes even more critical after a business sale. Trusts are powerful tools for wealth protection. These may help you shield assets from creditors, lawsuits and even probate.
• Investment and retirement strategy: With a large influx of cash, developing a sound investment strategy is crucial. Diversification is critical to managing risk and maximizing returns. You may also need to adjust your retirement plan and accounts based on your new financial status.
• Legacy and charity giving: If giving back is essential, consider setting up charitable trusts or donor-advised funds. These can provide tax benefits while supporting causes you care about.
• Medicaid eligibility: The business sale may disqualify you from Medicaid, which has strict income requirements. Consider consulting an estate planning attorney to structure your estate to qualify for assistance benefits.

Additionally, make sure your beneficiary designations align with your updated estate plan. Review and update your estate heirs, including the beneficiaries of your life insurance policies.

Invest in professional guidance for a secure future

Selling a business is a game-changer for your estate plan. A skilled estate planning attorney can navigate the legal maze for you. They can help you avoid costly mistakes and maximize opportunities, allowing you to create an effective estate plan tailored to your needs.