estate planning for self employed

Estate Planning and other Considerations for the Self-Employed.


Being self-employed is no easy task. You are the owner and, in some cases, the only employee. While you may have more freedom than the average worker, many responsibilities lie on your shoulders. To properly plan for your financial future and the future of your business and loved ones, having a comprehensive plan and an experienced advisor team is vital. The right advisor team can educate you about the available retirement plans and the best investment strategies based on your unique situation. You can also discuss the different types of insurance you may need to protect the essential aspects of your life, such as disability, life, and business insurance.

Estate planning should be a crucial part of your business plan but is often overlooked, especially by self-employed individuals. While the nature of being self-employed brings flexibility and independence, it also entails unique challenges when it comes to estate planning. Planning for the future becomes essential to protect your hard-earned assets and ensure a smooth transition for your loved ones.

1. Lack of Employee Benefits:

One of the primary concerns for self-employed individuals is the absence of traditional employee benefits, such as employer-sponsored retirement plans or life insurance coverage. Without these benefits, it becomes crucial to explore alternative options like Individual Retirement Accounts (IRAs), Simplified Employee Pension (SEP) IRAs, or a solo 401(k) plan. Properly establishing and funding these retirement accounts can provide a secure financial future for both you and your beneficiaries.

2. Business Succession Planning:

Self-employed individuals often run their businesses as sole proprietors or have partners. In the event of incapacitation or death, it is essential to have a comprehensive business succession plan in place. This plan should outline the transfer of ownership, responsibilities, and decision-making authority to ensure the smooth continuation or sale of the business.

As a self-employed individual, your business activities are likely to support most, if not all, of your financial needs. You need to ensure that you can support yourself and your loved ones no matter the circumstances. A good planning team can address some important considerations that may be keeping you up at night:

  • Are you the only person making money for the business, or are there employees?
  • What will happen to the business if you become incapacitated? Can the business continue without you, or does all work halt?
  • What will happen if or when you decide to retire? Will you need a different source of income, or will you have some aspect of your business that you can sell?
  • What will happen to the business and your loved ones when you die? What will be left to support your loved ones?

3. Asset Protection:

Self-employed individuals often intertwine their non-business assets with their business assets. Inadequate separation of personal and business finances can expose your assets to potential creditors or legal claims against your business. Establishing legal structures such as limited liability companies (LLCs) or corporations can protect your assets. Additionally, obtaining appropriate insurance coverage, such as liability insurance, can further safeguard your assets.

Everything in life comes with risk—being self-employed is no different. From a business standpoint, a self-employed person may be personally susceptible to the business’s creditors or other lawsuits involving the business’s activities. As an individual, you may also be concerned about personal creditor claims, potential divorces, and other lawsuits. Although we cannot eliminate all risks, we can take steps to help minimize them.

4. Estate Tax Planning:

Depending on the value of your estate, estate taxes may come into play upon your passing. Estate tax laws vary by jurisdiction, but it is essential to understand how they apply to your situation. Consulting with an estate planning attorney or tax professional can help you explore strategies to minimize estate taxes, such as gifting assets during your lifetime, establishing trusts, or utilizing exemptions and deductions.

5. Contingency Planning:

You are solely responsible for your income and financial well-being as self-employed. It is essential to have contingency plans to address unforeseen circumstances, such as disability or long-term illness, that may impact your ability to work and generate income. Consider obtaining disability insurance or creating an emergency fund to provide a financial safety net during difficult times.


Estate planning is crucial for everyone, but self-employed individuals face unique challenges that require careful consideration. By addressing concerns such as lack of employee benefits, business succession planning, asset protection, estate tax planning, and contingency planning, you can secure your legacy and provide for your loved ones. Remember, consulting with professionals, such as attorneys, financial advisors, and accountants, can provide invaluable guidance tailored to your needs. Taking proactive steps now, you can ensure a smooth transition and peace of mind for yourself and your beneficiaries.

We understand that you have a lot on your plate. We have helped many small businesses just like yours. Let us help you take part of the burden off your shoulders by crafting a plan unique to your circumstances.   Call us to schedule your first meeting and get you on the path to a protected future for you, your business endeavors, and your loved o

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