What do you think of when you hear the words “estate planning?”

If you’re like most people, you probably think about Wills, trusts, and the passing down of family heirlooms. 

These are definitely some essential components of estate planning. But one thing that often gets overlooked is the inclusion of business entities in estate planning.

If you’re a business owner, or have investments in various companies, this blog is for you! I’ll show you how to incorporate these assets into your estate plan. That way, you can easily preserve your legacy and ensure a smoother transition for your loved ones.
I’ll also discuss the importance of estate planning for business owners. I’ll also show you how it can make your family’s future more financially secure.

Including your business entities in your estate plan is an important step.

The Foundations of Estate Planning

Before we jump into the business entities in estate planning, let’s do a brief revisit of the basic foundations of estate planning.

The basic purpose of estate planning is to arrange your affairs before you pass away. Once those are arranged, your loved ones will know who your assets should be given to based on your wishes. Also, as you may already know, estate planning isn’t just for the wealthy. It’s for everyone — no matter what your financial status is. 

Having a proactive approach is best. It helps you prevent legal complications, minimize your tax liabilities, and provide what you really want: financial security for your loved ones.

Understanding Business Entities in Estate Planning

What exactly are business entities? 

Business entities are sole proprietorships, partnerships, limited liability companies (LLC’s), and corporations. They represent the different types of legal structures for operating a business. Of course, each entity has its own type of advantages and disadvantages. Especially when it comes to taxation, liability protection, and management. 

However, when it comes to business entities in estate planning, your choice of business entity can largely impact the well-being of your heirs — as well as your own legacy. 

Let’s take Evelyn the baker’s business, for example. When she was just starting out, she had a passion to create her own bakery “Sweet Creations.” When Evelyn considered her estate planning, she realized something. Evelyn saw how big of an impact her choice of business entity had on her long-term success, and her family’s future. 

She wisely opted for an LLC. This ensured personal liability protection, management flexibility, and favorable tax benefits for her bakery, Sweet Creations. This choice ultimately secured her family’s financial future and her business legacy!

You might have a different business entity than Evelyn — and that’s ok! Below is a list of how the various types of business entities can be integrated into your estate plan.

Sole Proprietorship

If you happen to be a sole proprietor, the assets of your business are typically part of your own personal estate. It’s your responsibility to designate a successor. You can also give instructions on how your business will be handled after your passing in your will or trust.


When you’re in a partnership, the partnership agreement should outline exactly what happens to your share of the business if you become incapacitated or pass away. This usually involves a buy-sell agreement between you and your partner.


Your stock ownership should be put in your estate plan. Especially when you own shares in a corporation. You’ll want to ensure to specify if your shares can be sold, transferred, or distributed to your beneficiaries.

Limited Liability Company (LLC)

Just like with a corporation, if you’re an LLC owner, you can specifically put in an operating agreement. This is what happens to your membership when you pass away. This can also be written into your estate plan.

While integrating your business entity is very important in your estate plan, it’s also vital to have a business succession plan.

The type of business entity you have will impact how your business is passed down after your death.

Why You Should Have a Business Succession Plan

Having a business succession plan is just as important as having a business estate plan. You want to make sure that your dreams, hard work, and legacy continue seamlessly after you’re gone! This plan ensures your strategy when it comes to passing down leadership roles after you retire or your death.

If you have a well-thought-out succession plan, it will help give a smooth transition. It also can help minimize your estate taxes. You’ll avoid any potential disruptions (that could lead to a decrease in business value or higher estate taxes) by having a clear-cut outline of who will take over — and how the transition will take place.

Creating an LLC can be part of your business succession plan as well. If you transfer ownership gradually through this entity, you will remain in better control of it during your lifetime. Plus, you’ll also lessen the taxable value of your estate. 

When you have a thorough succession plan, it will help your business maintain operational stability. Plus, it guarantees financial health. By securing the financial future of your business, you’re also protecting the livelihood of your employees.

Having a succession plan will ensure that your business goes the direction you want after you step away.

What You Need to Know About the New CTA

Speaking of protecting, I wanted to let you know there are some new rules rolling out. If you have an LLC, keep this in mind when estate planning. In addition to any registration or reporting you already do, (primarily at the state level) you definitely need to know about the new Corporate Transparency Act (CTA).

“The CTA is intended to help prevent and combat money laundering, terrorist financing, corruption, tax fraud, etc.”1 If you have a smaller or unregulated company, most businesses will file a report with the Treasury’s Financial Crimes Enforcement Network (FinCEN). The report is  about the people who own or control the company. FinCen then shares owner information with government authorities and financial institutions for specific purposes.

The reporting rules are effective January 1st, 2024. Any new companies that are formed after that date have 30 days to register in the Beneficial Ownership Secure System (also known as “BOSS.”)  However, companies that were formed before that date have until January 1st of 2025 to report. 1

Overall, the CTA law will help make sure that the ownership of companies is transparent. It will also help prevent illegal activities, like money laundering. Be sure to speak with your CPA or attorney about these new requirements.

Seeking Legal Help?

When you incorporate business entities into your estate plan, it’s not just about protecting your assets — it’s about safeguarding your legacy. Also, it’s to make sure your loved ones are financially secure. Think about what kind of business you own and how it affects your estate. Then you can start making a detailed plan.

This plan can help you in many different ways. You’ll pay less in taxes, clarify who gets what when you pass away, and ensure your business runs smoothly — even when you’re not around.You’re basically creating a “roadmap” to protect your money, your business, and your loved ones.

At Schroeder Larsen Law, we’re here to help ensure your estate plan covers everything from family to business. You are our number one priority — when we meet, we’ll get to know your unique situation and craft an estate plan that’s just right for you.

Click the link below to schedule an informative consultation about how to work your business into your estate plan today. We’re ready to hear from you!


  1. https://www.fincen.gov/boi/Reference-materials