Comprehensive estate planning is vital for most individuals, but even more so for business owners. If you own a company, and particularly one that you want to remain in your family after you die, a detailed business estate plan is essential for ensuring that your vision for your company is carried out.
There are many questions that must be answered. Who do you want to own and manage your company when you die? If you are interested in selling the company once you are gone, how do you want that transaction to be handled? What happens to your business if you are still living but incapacitated?
In this blog we will detail three important tools that business owners should utilize in their estate planning. Please keep in mind that estate planning for businesses can be a complex process, so it is essential that you consult with an experienced estate planning lawyer to ensure that your wishes for your company are properly fulfilled after you die. Every situation is unique. Please give us a call today to make an estate plan regarding your business.
A detailed buy-sell agreement is an absolutely vital element of a business estate plan when it comes to businesses with multiple owners. Also known as a buyout agreement, buy-sell agreements are legally binding documents that detail what will happen if one of the owners of a company dies, as well as what circumstances would allow for a buyout of an owner’s share in a company. For example, a buyout agreement could say that a buyout of one’s shares can only occur if an owner dies, and it can detail who exactly is allowed to take over those shares. It may also dictate details regarding the cost of buying a former owner’s interest in the company.
It is important to make plans for what will happen to your business when you die, but you must also plan for a scenario where you may be incapacitated and unable to make decisions. In such a case, you will need to have a Durable Power of Attorney document. This is your legal authorization for an agent that you name to make legally binding decisions on your behalf while you are incapacitated. Whomever you name as agent under a durable power of attorney over your affairs may be able to help ensure that your company continues to function as you would want it to while you are incapacitated.
The term “succession plan” is a broad term that can refer to numerous actions taken to plan for how a company will move forward into the future, particularly after an owner moves on from the company. It can involve making plans for how family members (or perhaps nonfamily members whom you feel would be the best fit for the company) will succeed you in running your business. Every plan will be unique to your own situation, but it could involve training people to later fill certain roles in your company, or perhaps selecting someone to manage the business in the interim until a young family member is old enough to take over. No matter how you approach it, every business should have some sort of succession plan in place.
For more information on creating a business estate plan, please contact the Law Offices of John Mangan today.