By Judith Schreiber Rowland

Business owners are accustomed to high standards when it comes to corporate finance and operational activities: delegation, accountability, and attention to detail are paramount to smooth decision making. When it comes to estate planning, however, those qualities often fall to the wayside. Important steps are neglected, communication among teams is lacking, and decisions that should be made ahead of time are left until after the owner passes on.

Certainly death is a difficult subject for families to address, but there are tremendous advantages to planning ahead as a team. Regular meetings with spouses and the family advisor should cover critical topics such as investment portfolios, the estate plan, real estate holdings, business assets, insurance coverage, income and expenses, and any and all debts or liabilities.

There are three key steps spouses of successful business owners should keep in mind as they plan for an eventual passing:

1.Know The Team

When difficult times arise, a sense of trust among the team of advisors is critical to sound decision making. Adding new relationships during an emotional time can lead to significant setbacks. Families should therefore devote time to achieving a level of comfort that allows for open discussion well ahead of a life changing event. At minimum, spouses should learn the basics of the portfolio, know the estate plan, and get fully organized.

The advisory team can also be useful in less obvious ways. For example, they can help locate a reliable data collection agency to securely store passwords, prescriptions and account information; they can help clarify power of attorney so that there are no surprises when faced with death or debilitating illness; and they can provide a customized checklist to be considered when a death occurs or is imminent.

2.Protect The Family Assets

For entrepreneurs who have built significant wealth, asset protection should be a staple of the estate plan. In addition to standard fare such as irrevocable trusts, advisors can form business entities such as a family limited liability company or limited partnership to house assets. This may not be right for everyone, but advisors should consider the options as there can be great benefits.

For example, married couples who have not used any of their lifetime exemption can fund an entity with over $10 million of assets that are immediately removed from the estate and protected from creditors. They can then gift shares of the company to family members at a discounted rate, increasing the value of the gift of assets received.

There is also an opportunity to capitalize on an estate tax exemption upon death. In 2012, there is a $5.12 million federal exemption per person, although careful attention must be paid to how assets are titled prior to a death. Asset titling will determine whether the assets end up in a trust or in the surviving spouse's name.

In 2012, this is less of an issue as there is a "portability loophole," whereby the estate of a deceased spouse can transfer to the surviving spouse any portion of the federal estate tax exemption that it does not use. However, as this is set to expire in 2012, business owners should ensure their assets are titled in the individual's name or in the name of his or her revocable trust, as assets held jointly with rights of survivorship between a husband and wife will not meet the criteria for the exemption. Unfortunately, this oversight happens all too often and can have devastating results.

3. Directing Business Assets

Owners typically prefer that their stake in the company pass to their business partners, but should they die intestate or fail to include business succession plans, the default structure transfers ownership to their spouse.

Partners must be certain their corporate structure is properly directed, often through the use of a buy/sell agreement. This comes into play when a business partner becomes disabled, deceased, retires or has an expressed interest in selling. Upon one of these conditions, the business share is sold according to a pre-determined method to the company or to the remaining members of the business.

In planning for a partner's death, most ownership teams will also have purchased life insurance on one another to ensure there are sufficient funds to provide surviving partners with assets to purchase shares back from the deceased partner's estate. This keeps control of the company in the existing management team while providing the surviving spouse with additional means.

When the time comes, preparation will have played a major role in providing confidence and security for the surviving spouse. The chemistry and trust among the team is as vital as its ability to provide the highest level of organization, investment guidance, administrative support, and sensitivity to an emotional situation. Taking action will still be difficult, but spouses can begin by focusing on the day-to-day while trusting their team to tend to the rest of their financial world.

Judith Schreiber Rowland, JD, CPA, is senior relationship manager at Lake Street Advisors LLC.