Reasons Why Business Owners Need an Estate Plan
When you put your heart and soul into starting and running a successful business, chances are you would be proud to pass the reins along to one of your children or another family member. However, this can be a difficult situation if a business owner does not have the appropriate estate planning documents in place. It can be a nightmare for your family as well as the business and its clients.
The best way to ensure your business passes along to the right individuals with little to no disruption is to schedule your appointment with an Orange County estate planning attorney who regularly works with business owners.
The following are some reasons why estate planning is essential for business owners.
Keeping the Business Out of Probate
You might think that you can simply pass your business to your beneficiaries through a last will and testament. However, all property that is transferred through a will must go through the probate process under California law, which you always want to avoid. Having your business go through probate can freeze operational accounts or result in other significant disruptions that can put your company in jeopardy.
Instead of simply using a will, you likely want to form a living trust, which is a legal entity that will own your share of the business. You maintain control over the business, but when you pass away, the business can pass to the designated beneficiaries of the trust without having to go through probate. This keeps your business interests out of court and sets it up for a smooth transition with little or no delay.
Having a Clear Succession Plan
If you want to pass your company ownership control to one or more specific family members, you want to be sure they know what they need to do to keep operations going without you or sell the business for the maximum value.
If you intend for someone to take over running the business, first, always make sure they want the job. Then, you will need a carefully developed plan set out that instructs how the transfer will take place with as little disruption as possible.
Avoiding Unwanted Ownership
When a company has more than one owner, the other owners might not want family members taking over your shares who have no idea what they are doing or have no interest in running the business. In this situation, a buy-sell agreement ensures that the other owners have priority when it comes to purchasing your business shares.
Finally, in case there is a gap in business operations, or there are other losses that come with your death or incapacitation, you want to protect your family, company team, clients, and more. Having the right life insurance policies in place can provide the liquidity needed while your affairs are handled and your company ownership transfers.
Learn More from an Orange County Estate Planning Attorney
At the Law Offices of Roshni T. Desai, we help business owners plan for the future to reduce costs and protect their companies and families. Contact us online or call 714.694.1200 for a consultation with an Orange county estate planning lawyer.