Posted by The Sterling Law Group on June 1st - Business Law
Business owners have many things to worry about as part of their business routine, but many forget to address an important aspect of their business – that is, what happens to the business in the event they pass on. It is important that if you are a business owner, you have a plan for the transition of your business in your estate plan.
At The Sterling Law Group, A.P.C. our best estate planning & business litigation attorneys help business owners in Roseville, Sacramento, and nearby cities to plan for the transition of their business ownership in their estate plans.
For the same reasons it is advisable to have a personal will, it is prudent if you are a business owner to have an estate plan that includes the transition of your business. If one passes on without written instructions as to what should happen to their business, then depending on what state they are in, the law will dictate for them what happens to the company.
In general, many states provide that the assets left behind by a deceased person should go half to the spouse and the other half to children. Many business owners don’t wish for this to happen. So, you want to have a clear business succession plan in place that will dictate how your business will be divided.
Something a business owner must decide along with how the business should be passed on is who should be in charge of making binding decisions about the business once the business owner passes on. This is not an easy decision, especially if there are no business partners. Even though the surviving spouse seems like they might be a logical choice, it does not necessarily mean that is the best option. This is because the spouse may not have been involved in the running of the business and, therefore, knows little or nothing about the business.
You want to carefully consider who is the best choice to take over your ownership. Other things must be considered, such as buy-sell agreements or other contracts in place with business leaders.
If you have named your spouse as executor or trustee, then they might have the right to sell or distribute your business either to themselves or to third parties and then keep the assets in the estate for the benefit of your heirs. However, it is a good idea to have a second trustee besides your spouse so that your spouse can take care of your financial assets like your home or cash, and a different trustee to take care of your business.
Making sure that you have a plan for the succession of your business – considering any buy-sell agreements – is essential whether the company will close or continue with operations. The best estate planning and business lawyers from the Sterling Law Group, A.P.C. can help you with this as many businesses in Roseville, Sacramento, and nearby. Contact us today for a consultation.