Establishing an estate plan should be a top priority for everyone, but it is especially important for anyone who is a business owner. You need to be sure that the business you built and grew will be passed down to the right people. The only way to do that is with a proper estate plan, preferably one made with the assistance of a Woodland Hills, California estate planning attorney from our firm.
Should a Business Owner Establish a Trust?
This is a good option and our estate planning lawyers can make it easy for you to establish one. A living trust would hold your shares of the business and keep it out of court if there was a need for a probate process. Then you can designate who the new business owner would be. No additional paperwork is needed and there are no extra fees to worry about.
What Else Does a Business Owner Need in Their Estate Plan?
If you do not plan to make a trust, you should include other important provisions in your estate plan that can help determine who will be in charge of your business once you are gone. Some things to consider including are:
A succession plan: This makes it clear which of your beneficiaries should take over your business for you. You can include details about when they will gain control and what kind of authority and responsibilities they will have. You can establish someone to be a backup successor, in case your original choice is unable or unwilling to fulfill these duties. You can also make plans to sell off your business.
Buy-sell agreement: If there are multiple owners of your business, this can allow existing partners to buy your shares when you pass away. This means that if your family does not want to continue to play a role in this business, they have an easy out and they will be fairly compensated.
Life insurance: A life insurance policy is a good investment for any small business owner. It can provide the money needed to handle your final affairs and pay for things like funerals and tax bills.
What if a Business Owner Passes Away Without an Estate Plan?
When a business owner passes away without an estate plan, their assets need to be passed down according to state intestate successor laws. A probate court will generally award the bulk of the assets to the deceased’s closest family members. If this is not what you wanted for your business or other assets, that is unfortunate. It just shows how important it is to establish an estate plan.
Contact Our Experienced Estate Planning Attorneys
If you have any more questions, contact the Law Offices of Yacoba Ann Feldman. We can help you set up an estate plan that protects your business and keeps it in the family.