If you are a business owner, whether you have an LLC, Sole Proprietorship, or have part ownership in a business, planning for your business interests is important. As a business owner, your plan may need to include a buy-sell agreement, business owned key-man insurance or other documents.
In the event of your death, if you own a Family Business, decisions will need to be made quickly about whether to keep the business running or liquidate and distribute the assets. Some family businesses have multiple family members who work for the company. Who will manage the company in your absence and who will make decisions? What about the family members who do not have an interest in the company? Will they receive a larger share of liquid assets to offset the family members who receive company assets? While family members may work well together during the lifetime of the owner, keep in mind that there may be chaos when you are gone.
Family business or no, if you have multiple owners, signed documents dictating the terms of a buyout, the right of first purchase, and dissolution are all critical. These documents can provide guidance and clarity to the surviving partner instead of leaving him or her wondering what to do next.
If you have a single owner business, it is important to make decisions now on who can access the business accounts and who can manage the assets at your death or upon your incapacity. Who can wrap up, sell, or continue the business? If you are disabled or incapacitated for an extended period of time, your temporary manager will need guidance on your desires for management of the business. Upon death or disability, goals are the same:
- Provide sufficient income and assets to keep the business going. Liquidity for the transition period;
- Fair price for ownership interest;
- Smooth transition between management;
- Avoiding probate of the business; and
- Avoid family or sibling rivalry.
If your business is such that the business will end upon your death, disability or retirement, do you have documents and a plan in place so that your Executor is able to systematically close the business? Are there records of open jobs, accounts payable and accounts receivable? Will your Executor be able to determine what jobs are closed, which have been invoiced, etc.?
As a business owner, you have more things to consider in your estate plan that simply who will inherit your estate. At Grissom Law, LLC we can help you prepare your business for any life event and ensure that your estate plan includes specific provisions necessary for your Executor or Trustee to act on behalf of the business. Planning and organization can help keep a chaotic situation calm and provide clarity for business during stressful times.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney client relationship between you and Grissom Law, LLC.