If you own an interest in a business, no matter the form of ownership—sole proprietorship, partnership, or corporation—you must have an estate plan. As a business owner, your most important consideration should be, what will happen to your business after you die?
If you want the business sold or liquidated, arrangements for these events must be considered. If the business owner wants a continuity, he must decide the method of transfer to the survivors. Typically, it is not advantageous to discontinue a business immediately upon the death of a sole owner, unless it is a single-person business. Some flexibility should be afforded to the survivors to continue its operation until it can be liquidated or sold by them on the most favorable terms.
If your business is a sole proprietorship, you need a plan in place so that your heirs know how to run the business without you or sell the business. What the business owns, owes, important contacts and bank account information must be laid out in a clear way.
If several people own your business, a buy-sell agreement is necessary. Without one, your beneficiaries may get stuck owning a business they don't want and can't sell. Your partners may get stuck with partners they didn't expect. A buy-sell agreement mandates that upon certain conditions (like the death of a shareholder or partner), parties to the agreement must sell their shares to the other parties at a fair market price.
Estate planning can minimize the amount of taxes your heirs will pay and allow you to control how your assets are distributed and provide your loved ones with financial stability after you die. Without an estate plan, your business may be tied up in probate, during which time the business may lose customers, causing the value of the business to decrease.
Our experienced estate planning attorneys can help you make sure your business is protected and the proper arrangements are made. Call Atlantis Law today to schedule your