Richard Siminou on Estate Planning Mistakes New York Business Owners Make

In my work with business owners across New York, estate planning is consistently the area where I see the largest gap between what people think they have in place and what is actually in place. Most business owners have a will. Far fewer have an estate plan that genuinely reflects their wishes, coordinates with their financial plan, and accounts for the complexity of owning a business.

Here are the mistakes I see most often.

Assuming a will controls everything

Many people believe that once they have a will, their assets will pass according to it. In reality, beneficiary designations on retirement accounts, life insurance policies, and certain other accounts override what the will says. If a designation is outdated, naming a former spouse or a person who has passed away, those assets pass according to the designation regardless of the will's instructions. Reviewing beneficiary designations is one of the simplest and most overlooked steps in estate planning.

Overlooking how assets are titled

The way an asset is titled determines how it passes at death. A jointly held account with rights of survivorship passes directly to the surviving owner, outside of probate and outside the will. An individually titled account passes through the estate. For business owners with multiple accounts and entities, understanding which assets are titled which way, and whether that structure is intentional, is essential.

Failing to coordinate the business succession plan with the personal estate plan

A business owner often has a buy-sell agreement, a succession plan for the business, and a personal estate plan. Too frequently these three documents exist independently and have never been cross-referenced. A buy-sell agreement that is not funded properly, or that conflicts with the personal estate plan, can create disputes and liquidity problems at exactly the moment a family is least equipped to handle them.

Not planning for liquidity

When a significant portion of an estate is tied up in an illiquid business, the estate can face a tax bill or obligations it cannot easily meet without selling the business under pressure. Planning for liquidity, sometimes through life insurance structured for this purpose, allows the family to meet obligations without a forced sale.

Letting the plan go stale

An estate plan is not a one-time document. Tax laws change, families change, and businesses change. A plan drafted ten years ago may no longer reflect current law, current asset values, or current wishes. Reviewing the plan periodically, and especially after major life or business events, is what keeps it functional.

Estate planning for a business owner is not just a legal exercise handled in isolation by an attorney. It works best when the financial plan, the business succession plan, and the legal documents are coordinated and reviewed together. Getting that coordination right is one of the most valuable things a business owner can do for the people they care about.

Richard Siminou, MBA, is the founder and principal of Siminou Wealth Management, an independent financial advisory firm headquartered in Kings Point, New York. He specializes in financial planning for business owners, entrepreneurs, and pre-retirees across the New York metropolitan area. This article is for educational and informational purposes only and does not constitute investment, tax, or legal advice.

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