Estate Planning for Business Owners with Young Children

Protecting Both Your Family and Your Company:

Business owners with young children face a dual planning challenge. The estate plan must protect the family while also addressing what happens to the company if something unexpected occurs. When these two sides are not coordinated, the result can be court delays, tax complications, leadership uncertainty, or pressure to sell the business at the wrong time.

A basic will is rarely sufficient in this situation. A more complete plan is needed.

Why Both Sides of the Plan Matter

For many business owners, the company represents one of the largest assets on the balance sheet. At the same time, young children depend on their parents for both financial support and day-to-day care. An effective estate plan has to address personal guardianship and asset management while also creating a clear path for business continuity or transition.

Leaving either side incomplete increases the risk that the surviving family and the business will face avoidable stress during an already difficult period.

Core Elements That Usually Belong in the Plan

• Guardianship nominations Clearly naming who would raise the children if both parents are gone helps avoid court involvement and ensures the decision reflects the parents’ wishes rather than a judge’s determination.
• Trusts for managing assets A revocable living trust (and in some cases irrevocable trusts) can hold assets for minor children, provide for their needs over time, and delay outright distributions until they reach a more mature age. This structure reduces the chance of a large inheritance being received too early.
• Business succession planning A well-drafted buy-sell agreement, often funded with life insurance, can create liquidity and a clear mechanism for transferring ownership. This helps keep the company operating and can prevent a forced or distressed sale.
• Life insurance coordination Life insurance is frequently used to provide liquidity for the family or to fund a buy-sell arrangement. In some situations, an Irrevocable Life Insurance Trust (ILIT) is used to keep the proceeds outside the taxable estate while still making the funds available for their intended purpose.

Gaps That Appear Frequently

Several patterns show up regularly:

• A solid operating agreement exists, but personal estate documents have not been updated in years
• Life insurance is in place but has not been coordinated with the overall estate and business plan
• No clear succession plan identifies who would run or acquire the business
• Guardianship and trust provisions for young children remain incomplete or outdated

These gaps tend to become more consequential as the business grows in value and complexity.

A Coordinated Approach Works Best

The most effective plans are built with input from an estate planning attorney who understands both family and business issues, along with coordination from the financial planner and CPA. Taxes, cash flow, ownership structure, and beneficiary designations all interact, and decisions made in isolation can create unintended results.

Addressing these issues while everything is calm provides clarity for the family and greater stability for the business. The goal is straightforward: protect the people who matter most and give the company the best chance to continue or transition on the owner’s terms.

You can explore Wolfstone’s approach to estate planning here.

This is for informational purposes only and is not personalized legal, tax, or financial advice. Please consult with a qualified estate planning attorney, financial advisor, and tax professional for guidance specific to your situation.

By Christopher Krzus, CFP^® 

Chris Krzus, CFP® is the founder and president of Wolfstone Wealth and a fee-only CERTIFIED FINANCIAL PLANNER® with more than two decades of experience. He began his career on the Chicago Board of Trade as a college kid, and has since specialized in comprehensive financial planning and investment management for busy and successful tech and business professionals and people in life transitions. Chris works with clients to bring clarity and confidence to their financial lives.