Estate plans of family business owners may be out-of-date

Owning a business can be a source of pride and joy for many people in Maryland. Many years of hard effort may have gone into making the business successful. As a matter of fact, over 70 percent of worldwide production can be attributed to family-owned businesses. They are one of the main parties in our nation responsible for private wealth. Part of this success is determining what will happen to the business if the business owner passes away.

Even though many business owners have estate plans, these plans may be out-of-date. On one hand, one worldwide poll of over 300 middle-market family-owned businesses reported that 90 percent of senior executors that were surveyed had undergone the estate planning process. However, merely 22 percent had reviewed their estate plans within the past couple of years. 25 percent have reviewed their estate plans within the past two to five years. The other approximately 50 percent haven't reviewed their estate plans in more than five years.

This is significant because 78 percent of respondents who had undergone the estate planning process reported that their net worth had increased significantly since the creation of their estate plans. Not only should an updated estate plan account for an increase in wealth, but it can also help business owners address the tax issues they may face upon the transfer of the business.

Estate planning is important for Maryland business owners, both personally and professionally. Updating these estate plans is an important step that should not be skipped.