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Are Estate Planning Rules for Freelancers and the Self-Employed Different from Other Individuals?
Like other individuals, freelancers and self-employed individuals should effectively manage their income, taxes, and assets through proper estate planning. They must keep proper financial records and prepare various estate planning documents to secure their assets and legacy.
However, given the potential for remote work, they must also consider state and international tax laws. If you’re a freelancer or self-employed, skilled lawyers from a reputable law firm in Phoenix and Minneapolis can provide more insights into the importance of estate planning and how to approach the matter for the most favorable outcome.
Why Do Freelancers and the Self-Employed Need an Estate Plan?
Freelancers and the self-employed run and manage their businesses. Those who hire them consider them independent contractors, so they must manage their financial affairs correctly. If you own a portfolio of intellectual assets, an estate plan can help you determine how it will be passed down to your beneficiaries.
You may own an LLC or other business entity that requires clear instructions on what will happen to them upon your demise. Estate planning and probate attorneys in Arizona and Minneapolis advise that a comprehensive estate plan can give you peace of mind, knowing that your hard work won’t get lost when you’re gone.
An estate plan also makes tracking the digital assets you accumulate over the years easier. You can incorporate various estate planning documents that list all your digital and physical assets, making it easier for those you leave behind to track and manage them. You can also designate trusted individuals to manage your businesses if you become incapacitated or die.
What Are Some Crucial Considerations for Freelancers in Estate Planning?
Estate planning is not a one-off event, as a lot goes into ensuring you have the right tools to avoid costly mistakes that could invalidate the plan. Understanding how to create it is crucial, and experienced estate planning and probate lawyers in Arizona and Minneapolis can guide you through the process based on a legal perspective. They recommend the following considerations:
Separate Your Personal and Business Assets
It is common for freelancers to blend their personal and business finances, but unfortunately, doing so can complicate estate planning. Distribution of assets after your demise will be easier if you establish clear boundaries between these assets.
Your heirs will have an easier time managing your estate, and there will be less confusion about who should receive what.
Chandler and Minneapolis estate planning attorneys add that the separation also protects your personal assets and finances from business-related liabilities.
Create a Business Succession Plan
Any self-employed individual must decide what will happen to their company if they become incapacitated or die. A proper succession plan defines the business successors or how it will be sold, making the path of continuity or closure clear. Your team of estate planning lawyers in Minneapolis and Arizona can help you evaluate your options for the most suitable decision.
Life Insurance Policies for Self-Employment
Life insurance is one of the primary pillars of an estate plan, offering financial protection to your loved ones. As a freelancer or self-employed individual, life insurance can protect your beneficiaries financially. It can also be a tool to help them cover outstanding taxes, business debt, and operational costs when you’re gone.
Discuss the various insurance options available with your legal team. The right policy can provide a safety net, ensuring your business is an asset, not a financial burden to your family.
Consider Buy-Sell Agreements
If you have business partners, a buy-sell agreement would be an indispensable part of your estate plan. The document specifies what will happen to your share of the business and outlines how your partners or company can acquire your interest when you’re gone. The legal document is a safety measure that minimizes unwanted external involvement by facilitating a smooth transition.
Consider Tax Implications
As a self-employed individual, you must carefully consider your estate plan’s tax implications. Estate planning lawyers in Arizona and Minneapolis explain that tax liabilities can minimize the value of your estate, leaving your beneficiaries with little to nothing to inherit from you.
Attorneys skilled in estate planning can help you identify strategies to navigate complex tax laws and reduce tax liabilities, such as utilizing trusts or family-limited partnerships.
What Estate Planning Tools Can a Freelancer Incorporate in Their Plan?
An estate plan may comprise many legal tools, but depending on your planning goals and needs, your Phoenix and Minneapolis law firm can guide you in choosing from among the following:
- Power of attorney to give someone the authority to manage your business affairs if you’re unable to work
- Trusts to provide clear instructions on how you would want your business to be managed once you pass on
- A Will to express your last wishes
You must create these tools according to state laws to make them enforceable. So, work closely with skilled legal experts to avoid making costly mistakes.
A Skilled Estate Planning Lawyer Providing Legal Estate Planning Advice for Freelancers
Estate planning is crucial for everyone to protect assets and the future of beneficiaries. However, freelancers and the self-employed may face unique challenges when setting up these plans. They must consider how to transition their businesses, handle taxes, and protect digital assets when they die.
Working with lawyers from reputable Arizona and Minneapolis could be a reliable way to handle these and other issues that may arise. The Metropolitan Law Group hosts knowledgeable estate planning lawyers to walk this journey with you. Let us evaluate your estate planning needs and help you choose the most suitable tools for your case. Call us at 612-448-9653 to schedule a case assessment.
