The more assets you have and the more complex those assets are the more complicated it is to make an effective estate plan. This is especially true if one of your assets is a business that will continue to operate after you pass away.
It is important to plan not only for how ownership of the business will pass from one generation to the next but also to plan for how day-to-day management of the business will as well.
The Wills, Trusts & Estates Prof Blog recently offered some tips for business estate planning in "Some Things To Keep In Mind When Estate Planning For A Business."
The advice includes:
- A will should state precisely how ownership of the business will be passed to heirs. A power of attorney should also be prepared so that someone can make decisions in case you are incapacitated.
- Any buy-sell agreements should be prepared well in advance and kept up to date. With these agreements the shares of a deceased owner can be purchased by any surviving owners with the proceeds going into the estate of the deceased owner.
- Plans should be in place for who should succeed the current owner in managing the business. Ideally, the person chosen should be made familiar enough with the business operations that he or she is able to step in quickly in the case of an emergency.
Keeping these tips in mind as well as seeking the advice of an experienced estate planning attorney can go a long way to making sure that a business survives the death of the current owner and passes to the next generation as smoothly as possible.
Reference: Wills, Trusts & Estates Prof Blog (May 13, 2016) "Some Things To Keep In Mind When Estate Planning For A Business."