Discover the Strategies & Tools That Can Sustain Family Businesses Following Death

Family businesses in Texas can be set up for multi-generational success with comprehensive estate planning. Regardless of company size and industry, key legal instruments can be put in place to reduce future exposures, facilitate smoother transitions, and retain more assets for the beneficiaries set to take over the family business.

That can preserve a lifetime of hard work for the next generation, safeguarding legacies while setting a family-run company up for decades-long success.

Highlighting how that can work, the following details: 

This guide can be an invaluable resource for those who start, run, and inherit family businesses in Texas, sharing crucial insights to facilitate cross-generational transitions and prosperity. It’s designed for family business entrepreneurs, startups, small businesses, growing companies, establishing organizations, and enterprise operations. 

Beyond this, you can also turn to the 5-star family business estate planning lawyers at TAW Law Texas for more answers and information in a confidential setting.

Essential Considerations in Family Business Estate Planning

Estate planning for family businesses can be a uniquely complex endeavor, raising several critical issues that are often intertwined, requiring careful consideration. Specifically, some of the key considerations in family office estate planning include: 

  • Family dynamics and beneficiaries: Who will be the next leader(s) of the family business? Which beneficiaries will inherit specific assets and/or responsibilities for the company? Should any restrictions or check-and-balance measures be established? These are often initial questions to start unpacking the complexities of family dynamics, who the beneficiaries should be, and how to proceed.
  • Assets: Family business assets can be tangible and intangible. Real estate, equipment, product inventory, and more can comprise tangible assets. In contrast, intangible assets can include intellectual property, royalties, and digital assets, like cryptocurrencies. Both types of assets should be accounted for in estate planning for family-owned companies.
  • Estate taxes: What does the family own versus the family business? What steps have been taken ahead of changing estate tax exemptions in 2026? What are the available resources to cover any future estate tax obligations? The answers to these questions can be incredibly high stakes, possibly putting millions or more on the line if estate taxes are put on the back burner indefinitely.
  • Texas probate: Death is inevitable, but Texas probate isn’t. That means that the right estate plan for family-owned businesses could mitigate the need for probate in Texas, possibly creating a path to bypass this process altogether. Without a solid estate plan, however, probate can take longer, cost more, and possibly be more contentious with family infighting. That may not only drain the assets available to a family business, but it could also irreparably damage the family unit and the business too.
  • Charitable giving: Donating to charity can be a viable estate planning strategy for some family-owned businesses, potentially offsetting certain tax liabilities. Additionally, charitable donations can crystallize a legacy while supporting the values on which a family business has been founded.
  • Compliance with Texas Laws: Wills, trusts, and other estate planning devices must fully comply with laws in the Lone Star State for maximum efficacy. Non-compliance could be grounds to invalidate parts of an estate plan. It could also open the door to contested probates in Texas, with beneficiaries fighting it out in court, instead of focusing on the family business.
  • A long-term estate planning partner: Families and the companies they run can evolve with time. As that happens, the needs for family office estate planning — as well as the beneficiaries and assets involved — can change too. Outside of that, Texas and federal laws are routinely changing, and those updates can impact family business estate plans. With a trusted partner, like an experienced estate planning attorney, family business owners can readily adapt their estate plans with greater ease and confidence. They can also keep their finger on the pulse of any new laws that may impact their estate plan. 

With nearly 1 in 3 Texas businesses being family-owned, estate planning for family businesses isn’t an isolated issue for the few. On the contrary, family office estate planning can be vital on a wider scale, not just supporting the future of a family-owned business but also the communities they serve.

6 Estate Planning Devices to Retain Family Business Assets & Minimize Estate Taxes 

Estate plans for family-run businesses can comprise an intricate web of strategies and legal instruments aimed at achieving multiple objectives in tandem. When those goals involve asset protection and estate tax minimization to sustain a family business for the next generation, essential estate planning devices can include (and may not be limited to) the following. 

1. A Will

Often a cornerstone in estate plans, wills specify how the assets of an estate are to be distributed upon the maker’s death. In the context of family business estate planning, a will can designate an executor, beneficiaries, and specific terms to:

  • Distribute family business ownership and/or assets shares not held in a trust
  • Designate beneficiaries and successor beneficiaries to inherit these assets
  • Prevent Texas intestacy laws from being invoked (These would come into play if no will is left behind.)
  • Name guardians for minor children and/or pets
  • Share last wishes for funerals and/or burials
  • Further your overall business succession and family office estate planning goals  

As a result, wills can be an ideal starting point for kicking off an estate plan for family-owned businesses.

2. FLPs for Family Businesses

As another viable tool for Texas family offices, family limited partnerships (FLPs) can simultaneously address succession planning, asset protection, and estate tax concerns. Structured to “pool” assets owned by a family business, FLPs are typically organized to include:

  • General partners: These are usually senior family members who head up the business and manage the partnership.
  • Limited partners: As more junior members of the FLP and often the business too, limited partners tend to be children or junior family members with ownership interests but no management authority. 

Consequently, FLPs can serve as a highly effective device for: 

  1. Safeguarding family office assets: FLP assets can be untouchable by creditors because multiple parties — not just a single debtor — own the assets in question. This can offer greater peace of mind that a family office’s assets are well-protected in the future.
  2. Facilitating the tax-efficient transfer of wealth: FLPs can set up mechanisms for distributing certain assets to surviving partners when a member passes away. That occurs without probate and without contributing to estate tax responsibilities. In fact, since the assets in FLPs will not be in members’ estates, these partnerships can offer distinct tax advantages, with the potential to save millions or more for some organizations.

3. Family Office GRATs

Grantor-retained annuity trusts (GRATs) can be another way to protect assets while striving to minimize estate taxes for family-run companies. With GRATs for family businesses: 

  • The company owner (grantor) will set up the GRAT and transfer ownership of the family business to the trust.
  • The grantor will be able to draw annuity payments from the trust for a distinct period.
  • When that period ends, the GRAT’s assets can be distributed to the beneficiaries, which can be the children inheriting the family business. If the GRAT’s assets appreciate more than the IRS’s assumed rate of return, beneficiaries can inherit the appreciation tax-free.

As such, GRATs for family-owned businesses can offer a way for senior family members, including those who may have started a family business, to retain some income and financial support, including through retirement. These trusts can also provide an efficient, tax-effective way to: 

  1. Transition family offices into new leadership
  2. Preserve family business assets and legacies with exceptional efficacy 
  3. Reduce the value of a taxable estate to achieve estate tax minimization objectives. 

4. ILITs

Irrevocable life insurance trusts (ILITs) can be another vital component of a family office estate plan, supporting liquidity needs while keeping life insurance proceeds out of the taxable estate. With ILITs for family business owners: 

  • A grantor, usually a senior member of the family or the head of the business, would set up the ILIT.
  • The ILIT would be funded with an existing life insurance policy or cash to take out a policy.
  • Once funded with the life insurance policy, the ILIT is the owner and beneficiary of the policy, preventing the death benefits from becoming part of the grantor’s estate. 

Bringing the value of the estate down, ILITs can be another viable strategy for reducing estate taxes. Additionally, these trusts can ensure beneficiaries have access to cash to cover anything from tax bills and possible buyouts to family business operations, day-to-day living expenses, and more. 

That can keep family business assets as intact as possible, reducing the risk that these would need to be sold off in the future to cover necessary expenses. 

5. SLATs

Designed for married couples, a spousal lifetime access trust (SLAT) is an irrevocable trust that can transfer a deceased spouse’s assets to the surviving spouse without the need for probate. As such, the assets in a SLAT would not be part of the grantor’s estate, so they won’t contribute to estate tax valuations or liabilities. 

Notably, the assets held by SLATs can include family business interests, and:

  • Those interests can appreciate outside of taxable estates. 
  • SLATs can allow for distributions to the grantor spouse to support certain financial needs. 
  • Family business assets within the SLAT can be shielded from potential creditors.
  • Family business assets that remain after both spouses pass away can be left to surviving children.

Those are just some ways that SLATs for family businesses can enhance continuity when death occurs while supporting long-term operational and financial stability. That’s why many married couples in Texas include SLATs in family office estate plans to both safeguard prized assets and reduce future estate tax obligations.

6. More Family Business Estate Planning Tools

With or without the above devices, additional legal instruments that can support estate planning for family-run offices may include (and is not exclusive to):

The options for Texas family businesses are vast, with opportunities to customize these tools using specific terms, addendums, and unique combinations of trusts. Selecting what’s best for your family business can be easier with the counsel of an experienced estate planning lawyer at TAW Law Texas.

6 Important Estate Planning Strategies for Family Businesses in Texas

To leverage estate planning devices for family offices with optimal impact, strategies like (and not limited to) the following can be critical.

1. Start succession planning as soon as possible.

Identifying the next generation’s leaders for a family business can allow for early, ongoing training, with room to create transition timelines, redundancies, and backup plans, as needed. All of this can facilitate much smoother transitions while reducing the possibility of “blindsides” that could spark will contests or other disputes later.

2. Leverage TOD and POD designations.

“Transfer of Death” and “Pay on Death” designations for bank accounts, vehicles, stocks, bonds, and other investments can immediately transfer certain assets to the named beneficiary when the account holder or asset owner dies. 

With that, these assets don’t become part of an estate, and they won’t be held up in any probate proceedings. Crucially, the beneficiaries named in TOD and POD designations can be businesses, as well as family members who are running those companies. 

3. Keep an eye on estate tax exemptions.

If you’re engaged in family business estate planning before 2026, you could leverage nearly double the exemptions while current tax laws are still on the books (they sunset on Jan. 1, 2026). Before or after 2026, however, using these exemptions in judicious ways can help offset estate tax liabilities while furthering family asset protection goals. 

4. Create a communication strategy.

Surprises in estate planning and family business transitions can cause more disruptions and stress than may be necessary. With a well-devised communication strategy in place, you can keep executors, beneficiaries, trustees, and others informed, so they know what to expect and do as transitions are necessary — including when a matriarch or patriarch dies.

5. Plan for the unexpected.

What happens if a beneficiary, executor, or trustee suddenly passes away — who steps into their place in the scheme of the estate plan? What if contests are raised to challenge the will, specific leadership appointments, and/or any trusts you have set up? Planning for outlier possibilities can provide for a more thorough, stronger estate plan. 

6. Schedule regular reviews of your family office estate plan.

At least once a year, make it a priority to go through the estate plan for your family office, ideally with a trusted attorney, so you can make any updates necessary to comply with recent changes to the law, sunsetting estate tax exemptions, and/or the current state of the family-run company.

These may not be the only advantageous strategies to put into play with estate planning for family-run businesses, but they can help you move forward on the right foot. So can an experienced family business estate planning lawyer at TAW Law Texas.

How to Get Started with Family Business Estate Planning in TX

A click or a call is all it takes to get started with family office estate planning in Texas. When you reach out to the family business estate planning lawyers at TAW Law Texas, we can guide you at every step of the process, taking over any heavy lifting and complicated endeavors to set up, revise, and administer family business estate plans. We also represent executors, beneficiaries, and others in contested and uncontested probate in Texas. 

To get more answers, experienced support, and trusted counsel, contact TAW Law Texas.

Email us or call 512-827-9212 for a free, confidential consultation.

As leading estate planning attorneys in Austin, we have an unwavering reputation for providing exceptional counsel and value-driven solutions in all aspects of family business estate planning in Travis County, Williamson County, Bastrop County, Blanco County, Hays County, and beyond. We are also devoted to going the extra mile for our clients, which is why we offer next-level premium probate services for additional peace of mind.

To see our family business estate planning in action, browse our testimonials — or set up your free, no-obligation consultation with top Austin attorneys.

Family Business Estate Planning Lawyer at TAW Law TX

Todd A. Wilson

Todd A. Wilson has been practicing law since 2007, with the aim of educating all strata of society and sharing crucial insights about the importance of estate planning, probate, and more.

The Law Office of Todd A. Wilson (also known as TAW Law TX) offers affordable estate planning and probate services.

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The post A Blueprint for Family Business Estate Planning & Estate Tax Minimization first appeared on Law Office of Todd A. Wilson.