For many established business owners, the company is more than a source of income. It may represent years of work, a significant portion of personal wealth, jobs for employees, and a legacy the owner hopes will continue after they step away.
Yet estate planning and business planning are sometimes treated as completely separate matters.
For a business owner, they often need to work together.
A business interest can form part of an owner’s estate. For federal estate-tax purposes, the IRS includes business interests among the types of property that may be included in the gross estate.¹ But identifying the business as an asset is only the beginning.
Business owners should also consider what happens to their ownership interest at death, who can act if they become incapacitated, whether existing business agreements support their estate-planning intentions, and how the company would continue through a transition.
A useful question to start with is:
If something happened to me, would my estate documents and my business documents work together?
Start With Your Ownership and Business Agreements
The legal structure of the business matters.
An owner might hold shares in a corporation, a membership interest in an LLC, or an interest in a partnership. The documents governing the business may contain rules about transfers, management, admission of new owners, and what happens when an owner dies or leaves the company.
For example, Maryland law permits an LLC operating agreement to address management, assignments of membership interests, admission of members, and other rights and responsibilities.²
That means a will or trust should not be reviewed in isolation from relevant business documents.
Depending on the company, those documents may include an operating agreement, shareholder agreement, partnership agreement, or buy-sell agreement.
The goal is simple: make sure the estate plan and business agreements support the same intended outcome.
Plan for Incapacity, Not Just Death
Estate planning is not only about what happens after someone dies.
The Maryland Judiciary explains that life and estate planning can address circumstances in which a person becomes unable to make decisions and identifies documents such as wills, powers of attorney, and advance directives as part of that planning.³
For a business owner, incapacity can quickly become an operational issue.
Who can handle necessary financial matters? Who can make important decisions? Who has access to essential information? Can someone else exercise authority that has historically rested with the owner?
A power of attorney can provide an agent with authority over specified financial or business matters, but it should be considered alongside the company’s governing documents and other applicable arrangements.³
The practical question is:
If you were unexpectedly unavailable tomorrow, could the appropriate people keep essential matters moving?
Inheriting Value Does Not Always Mean Inheriting Control
For owners of closely held companies, another important issue is the difference between receiving the economic value of a business interest and receiving the right to manage the company.
Maryland LLC law, for example, distinguishes between economic and noneconomic interests. Noneconomic rights can include rights relating to management and voting.⁴ Maryland law also contains specific rules governing when an assignee of an economic interest may become a member of an LLC. Unless the operating agreement provides otherwise, assigning all of a member’s economic interest also ends that person’s membership and forfeits the noneconomic interest. ⁵
That distinction matters.
An owner may want children to benefit financially from the business without managing it. One child may already work in the company while another has no involvement. In a multi-owner business, the other owners may also have rights under existing agreements.
Estate and succession planning can help address these issues before a transition occurs.
Decide Who Should Own the Business and Who Should Lead It
Ownership succession and management succession are not necessarily the same thing.
The person who should benefit from the value of a business may not be the person best positioned to operate it.
Business owners should consider:
- Who should receive my business interest?
- Who should have management authority?
- Do my business agreements support that transition?
- What rights do other owners have?
- What happens if my intended successor cannot or does not want to take over?
Single-member LLC owners should pay particular attention to continuity. Maryland law contains specific provisions concerning what may happen when an LLC has no remaining members, making the governing documents and succession arrangements particularly important.⁶
Rather than assuming that a spouse, child, or colleague will simply “take over,” owners should determine what their documents and applicable law actually provide.
Understand the Business’s Value
For some owners, the business is one of their largest assets.
Understanding its value can therefore be important when considering estate, tax, and succession planning. For federal estate-tax purposes, business interests may be included in the gross estate and are generally valued under federal valuation rules.¹
Not every estate will owe federal estate tax. For individuals dying in 2026, the federal basic exclusion amount is $15 million, although additional rules apply in determining estate-tax filing requirements and liability.⁷
Maryland also has its own estate tax and an inheritance tax on certain transfers, and the Maryland estate tax exemption ($5 Million) is much lower than the federal exclusion. A Maryland estate can therefore owe state tax even when no federal estate tax is due.
Tax thresholds should not, however, become the sole focus of planning. The appropriate strategy can depend on the owner’s assets, business structure, previous transfers, family circumstances, and long-term objectives.
Don’t Forget Business Continuity
Estate planning addresses what happens to an owner’s assets and authority. Business continuity asks another important question:
What happens to the company while the transition is taking place?
Employees may still need direction. Clients may still require service. Financial obligations still need attention. Important information must remain accessible to the appropriate people.
A business owner should consider where critical records are kept, who has appropriate access, how essential responsibilities are delegated, and whether the company depends too heavily on one person’s knowledge or authority.
If an estate operates a business following an owner’s death, federal tax and administrative requirements may also arise.⁸
A successful company should not have to begin figuring out these issues for the first time during a crisis.
Review Your Plan as Your Business Changes
An estate plan created when a company was small may no longer reflect the needs of an established business years later.
The company’s value may have changed. New owners may have joined. Family members may now work in the business. The owner may have acquired additional assets or developed different plans for retirement and succession.
A review does not necessarily mean every document needs to be replaced.
It means making sure the existing plan still reflects what you own, how your business operates, and what you want to happen next.
Your Business, Estate and Tax Planning Should Work Together
For an established business owner, estate planning is about more than preparing a will.
The business is an asset, but it is also an operating organization with employees, obligations, management responsibilities, and potentially other owners.
That makes two questions particularly important:
What happens to your interest in the business?
And what happens to the business itself?
At the Law Offices of Beverly Winstead, we help business owners consider how business, estate, tax, and succession planning intersect so that the different parts of their plan can work together.
If your business has grown or changed since your estate plan was created, it may be time to determine whether your planning has kept pace.
Contact the Law Offices of Beverly Winstead to schedule a consultation.
This article is for general informational purposes only. It is not legal or tax advice, and reading it does not create an attorney-client relationship. Attorney advertising.
Sources & Legal References
- Internal Revenue Service, Estate Tax. IRS Estate Tax guidance
- Maryland Code, Corporations & Associations § 4A-402. Maryland General Assembly § 4A-402
- Maryland Judiciary, Life Planning & Power of Attorney. Maryland Courts guidance
- Maryland Code, Corporations & Associations § 4A-101. Maryland LLC definitions
- Maryland Code, Corporations & Associations § 4A-604 and 4A-606. Maryland General Assembly § 4A-604; Maryland General Assembly § 4A-606
- Maryland Code, Corporations & Associations § 4A-902. Maryland General Assembly § 4A-902
- Internal Revenue Service, What’s New – Estate and Gift Tax. IRS 2026 estate and gift tax information
- Internal Revenue Service, Responsibilities of an Estate Administrator. IRS estate administrator guidance