If you own your own company, you know that running a business is a complicated venture that takes loads of planning time. Besides planning to grow and expand your business, you must also determine what will happen after your death.
No Business Estate Plan
If you don’t include your business in your estate plan, then it may not survive your death. If you have full or partial stake in a business, it will be considered a part of your estate upon your death. If you have not named someone to take over after you die, or if you have multiple partners fighting over your part of the business, your business may flounder while the matter is worked out in probate court. Because probate is a lengthy process, your company may be greatly affected by a large time period of indecision, disagreements and possibly mismanagement.
Dissolve the Business
If you own a family business, you may wish to pass your business along to your family members. What if no one wants to take over? Even if a family member is running the business with you at the time of your death, he or she may wish to take the opportunity to pursue other ventures. In this case, since you have created no plan and no one is willing to take over, your company will have to be sold or dissolved. If you plan ahead, you will already know that your business will close after your death, and you can make the necessary arrangements to ease the process. If you do not, unwilling family members may be placed with the burden of running the business for a short time while probate works out a sale.
Passing on the Business
If someone in your family or one of your business partner’s wishes to keep the business alive after your death, he or she may face opposition from others who wish to sell the business or who also wish to have a say in running the company. If you know that you can pass the business on to a ready and willing person, say so in an estate plan. Like a guardian plan for your children, an estate plan for your business allows for an easy hand off, so your company can maintain stability.
The place to start in planning for your business is to consult with an experienced and qualified estate planning attorney.