If you are in business for yourself, you may be pondering your options for keeping the doors open after you pass away.

How you transfer ownership will be guided by the best fit among the available options.

Develop a succession plan

You might wish to create a succession plan that would address business ownership and management transfer. Among other points, such a plan might include the development and training of the successor you name, delegation of ownership and management responsibilities, and retention of key employees.

The buy-sell agreement

If there are co-owners, you could draft a buy-sell agreement, the main focus of which is that if one owner dies, the others will automatically purchase his or her interest. This kind of agreement can also ensure that your family members do not accidentally become owners of the business.

Two trust ideas

If minimizing the tax impact of transferring your business is important to you, your attorney might suggest that you consider setting up a trust. For example, you could establish an Irrevocable Life Insurance Trust for your life insurance policy. You name the ILIT as your beneficiary and your family becomes the beneficiary of the ILIT.

Another kind of trust that can enable you to pass your business assets to loved ones is the Grantor Retained Annuity Trust, or GRAT. Your business may grow between the time you create the trust and the time you pass away, but your beneficiaries will not have to pay estate taxes on any appreciation that develops.

The family limited partnership

You can establish the family limited partnership for the purpose of holding the business assets. In transferring your business, there are ways to avoid probate, to realize gift-tax savings and to ensure that you have an income stream during your lifetime. It is a matter of learning about the possibilities and choosing the option that makes the most sense for your situation.