If you own a business, you know the hard work and planning that go into building something. A business, especially a family-owned one, may be one of the most valuable assets in an estate. That’s why estate planning is so important for business owners. Careful estate planning geared with the business owner in mind can make or break the company’s future. Fortunately, entrepreneurs have several estate planning tools to help them keep the lights on and payroll, well, rolling.
General Estate Planning is a Given.
Good estate planning addresses every part of your life, including your business. After all, your business, as an asset, may be a big part of your probate estate. When you talk to your estate planning attorney about your Will, power of attorney, trusts, and other important legal documents, make sure your business is part of the discussion.
Successful Business Succession Plans Are Needed!
Buy-sell agreements state how a company with more than one owner will handle a co-owner’s interest when that person’s involvement has ended. Provisions in these agreements may:
- provide other owners the opportunity to buy the interest before other buyers;
- indicate how to calculate the value of the ownership interest;
- state how the partners will pay for the interest; and
- restrict who can buy an ownership interest in the company.
Buy-sells can be negotiated when operational documents are signed or during the company’s existence. They can also be prepared as one component of a business owner’s estate plans, along with other strategies.
Let’s look at an example of how estate planning affects a typical business owner: Let’s say Emma and her partners own a successful business manufacturing and selling camping supplies and equipment. Emma prepares and signs a Will, using a form she found online. She didn’t include anything about her business or talk to an attorney about business succession plans. She passes away unexpectedly, leaving her business in shambles. No one knows who should take over. Her partners want to buy out her interest, but they can’t reach an agreement with her spouse. Relationships with the company’s vendors and clients crumble. Her business interests decrease in value, which in turn reduces the estate she’s leaving her heirs.
Business Owners Need Business Estate Planning.
Had Emma taken the time to do some estate planning for her business, her company and, more importantly, her family would not have suffered chaos and financial loss. Make sure your business interests are included in your estate planning.
Contact the attorneys at the Dillon Law Group, PLC with your estate planning concerns. We give our clients the personalized attention they deserve. Call us at 757-962-4796 to schedule an appointment or use our Contact Form to let us know you’re interested. We assist clients in Virginia Beach, Newport News, and surrounding areas.