As a business owner, you spend countless hours building your enterprise, nurturing its growth, and ensuring its success. But what would happen to your business if you were suddenly gone—due to an unexpected illness, accident, or death? For California entrepreneurs, this is not just a hypothetical scenario—it’s a critical estate planning issue.
At Herbert Law Office, we work with many small and mid-sized business owners who want to ensure their legacy lives on and their loved ones are protected. Here’s what you need to know.
Why Estate Planning Is Different for Business Owners
While everyone benefits from a solid estate plan, business owners face added complexity. Your business isn’t just a source of income—it’s an asset, a responsibility, and often a family’s livelihood.
Without proper planning, your business could face:
- Operational paralysis due to lack of legal authority
- Ownership disputes among heirs or partners
- Tax burdens that eat away at your legacy
- Forced sale or closure during probate
California’s probate system can be time-consuming and expensive, which can create even more hardship for your loved ones and your business.
Key Components of an Estate Plan for California Business Owners
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Living Trust
Directing your business proceeds into a revocable living trust can help ensure a seamless transition. In California, this also avoids probate—a costly, time-consuming, stressful and public court process. A trust allows you to name a successor trustee who can manage or distribute the business assets according to your instructions.
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Buy-Sell Agreement (if you have partners)
A buy-sell agreement outlines what happens to your share of the business if you die, become disabled, or want to leave. This legal document can prevent disputes and provide a clear path forward for co-owners.
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Power of Attorney
If you become incapacitated, who can legally sign checks, make payroll, or access business accounts? A financial power of attorney appoints someone you trust to act on your behalf during your lifetime.
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Succession Plan
Your estate plan should work hand-in-hand with a clear business succession plan. For corporations and Limited Liability Companies (LLC), your succession plan in your business documents should work with your estate plan to protect you and your loved ones. Who will take over the business? Will it stay in the family or be sold? Do they know your wishes? Documenting this ahead of time ensures your intentions are honored.
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Proper Titling and Entity Structure
Make sure your business is titled properly—especially if you own it through an LLC or corporation. In California, your ownership interest in an entity is a transferable asset, but it needs to be coordinated with your trust and estate plan to avoid probate.
Don’t Forget About Taxes
Although California doesn’t have a formal inheritance tax, there are many ways that specific types of assets can be taxed under state law. Also, federal estate tax can still apply, especially for business owners whose enterprises push their estate above the exemption threshold (currently $13.99 million per individual in 2025).
Even if your estate won’t owe taxes, your heirs could still face capital gains or property tax reassessments. Strategic planning now can minimize those burdens later.
Final Thoughts
No one likes to think about a day when they might not be here—but failing to plan can jeopardize everything you’ve worked so hard to build. Estate planning for business owners isn’t just about protecting your assets; it’s about protecting your people, your employees, and your future.
At Herbert Law Office, we help California business owners craft thoughtful, strategic estate plans that reflect their values and protect their legacy. Whether you’re just getting started or looking to update your plan, we’re here to help.
Let’s talk. Schedule your FREE consultation with us today at (661) 273-9007 to protect your business—and the people who depend on it.