For busy business owners, it’s easy for estate planning to fall by the wayside. According to a recent Edward Jones study, over a third of business owners do not have a business succession plan in place. One of the top reasons for lacking a plan is not knowing where to start. Even those who do have a complete estate plan that accounts for both business and personal assets might not have up-to-date documents.
If that sounds like you, you’re in the right place. This blog guides you through the steps to creating a solid estate plan as a business owner.
1. Create a Business Succession Plan
Without a clear succession plan, it’s easy for your business to end up in a situation where people fight for control or the company falls apart. Putting together a solid plan is the best thing you can do to safeguard your business legacy.
Your business succession planning should cover both future management and future ownership. For instance, maybe you want your family to have income from your business shares after you pass on, but someone else to run the business. Or, maybe you want your business partner to have the right to buy out your shares.
Also, transferring business ownership during your lifetime has different legal, tax, and liquidity implications from a transfer after your death. You might want to talk to your estate planning lawyer or CPA about how different options would work and whether you need to set up a trust.
Succession planning is also a good time to take inventory of your business assets, liabilities, and key information. If some of your business assets are under your own name rather than the company name, you will need to include them in your personal estate planning and decide how to deal with any tax or legal implications. You will also want to document essential day-to-day information for your successor(s), such as important passwords, contracts, and institutional knowledge.
Check out our guide to business succession planning to learn more about this step.
2. Designate Beneficiaries on Accounts
Even if you include your bank and investment accounts in your will, it’s a good idea to designate beneficiaries on the account. Beneficiary designations can help your loved ones avoid probate costs and unnecessary stress after you pass away. You should always keep them up to date — they may take precedence over your will.
A beneficiary can be anyone you like, including your spouse, family members, friends, a trust, charities, or your estate.
3. Draft Your Will
Washington state law has intestacy laws for distributing property to your family if you die without a will. However, those laws might not lead to the outcome you’d like, especially for your business. You can ensure your business shares and other property goes to the heirs of your choice with a will.
If you started or acquired your business during marriage, it is likely considered community property, but if you started it before your marriage, it’s likely partially or entirely separate property. Under intestacy, if you’re married and have children, your spouse will get all of the community property and half of the separate property, and your children or their descendants will get the other half of the separate property. If you’re not married, your children or their descendants split everything. If you have no living descendants, your property will be split between other relatives.
Your will can change who gets your business shares and any other property associated with your business under your name. For instance, if you want to make sure a child who is closely involved in your business gets the majority of your shares, you can specify that in your will.
As you start planning your will, make sure it includes all your assets. These can include real estate, business shares, bank accounts, retirement accounts, investments, family heirlooms, furniture, jewelry, artwork, antiques, and anything else you own.
An experienced lawyer can help you draft an airtight will. The right lawyer will be able to help you ensure your heirs get the property you want them to have, avoid unnecessary legal trouble, and avoid unexpected impacts based on state or federal law.
4. Plan For Estate Taxes and Expenses
Both the federal government and Washington State tax estates over a certain amount. If you are a Washington resident or own tangible assets such as a home or boat in this state, your executor may need to file a Washington estate tax return. As of 2025, gross estates that add up to $2,193,000 or less do not need to file a return, but larger estates do.
The federal estate tax will also kick in if you leave behind more than $13.99 million in 2025. However, both the state and federal estate tax exemption ranges are likely to change in future years depending on inflation and political changes.
Your estate may be able to take some deductions that lower its value below the Washington estate tax threshold, even if it’s worth a lot. For instance, your estate can deduct:
- Property left to a surviving spouse.
- Family-owned business interests (capped at $2.5 million) under some circumstances, including that an inheritor of the business must continue it for at least three years after your death.
- Charitable donations to qualified organizations.
- Administration expenses, including funeral costs and attorney fees.
- Debts owed.
- Real estate and items used for farming, if they make up more than half the value of the estate.
Your expected taxes and other estate-related expenses may change some aspects of your planning. For instance, you may want to buy life insurance or leave some liquidity in the estate so that your heirs don’t need to sell shares to cover taxes.
To learn how you can plan for taxes on your specific estate, we recommend speaking with a CPA. They can help you figure out how to organize your estate in a tax-efficient manner. Your lawyer may be able to recommend a good CPA.
5. Finalize Your Documents and Communicate Your Plans
Many estate-related issues stem from either not working with a lawyer or not communicating with your heirs. If your heirs don’t know your plans, there is likely to be confusion after your death and maybe even legal disputes that wear away the value of your estate.
A lawyer can help you avoid estate planning mistakes. They can help you understand the legal ramifications of different choices and ensure your documents have all the right details needed to avoid unexpected consequences. They can also help you add a no-contest clause to discourage your heirs from challenging your will.
If you need an experienced estate planning lawyer in Western Washington, the Anderson Hunter Law Firm is here to help. Several of our firm’s lawyers have deep experience with estate planning, probate, and business-related legal matters. Schedule a consultation with us today for help with your estate planning.