A business can become stalled in probate without proper planning. Your heirs may need a
probate court's approval for business decisions
while the estate is being probated. You have
several options for avoiding this situation.
Who Will Continue Your Business?
- If your beneficiaries will continue your business, you can arrange for a relatively simple transfer of ownership through a sale or gifting.
- If your beneficiaries will not continue your business, you can make provisions for selling your business when you die or having another individual manage it.
Buy-Sell Agreements
A buy-sell agreement is an understanding reached
among owners of the same business to buy and sell
their respective interests in the corporation upon
their individual deaths. Life insurance is
typically used to provide enough money for the
remaining owners to "buyout" the seller, usually
the surviving spouse or family members.
Key Person Insurance
To ensure the continuation of a business after
their death, many business owners purchase key
person insurance. The proceeds from this type of
policy may be used to pay a recruiting firm to
find a new manager for the business; to buy back
company shares from the deceased’s estate; or
to cover other financial losses that may occur
when talent critical to the company’s success
is gone.
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Consult a professional estate planner with strong
business and tax experience when planning for small
businesses.
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Getting Help
Whether you need only a simple will or are
considering a complicated trust, professional
advice is essential. If you are a business owner,
establishing trusts and other alternatives for
business continuation particularly require the
expertise of an experienced estate planner. Look
for someone with established industry credentials.
Whatever your situation, you should also feel
comfortable and confident in your
professional’s abilities and willingness to
honor your wishes. This individual will work
closely with you to help you provide a secure
future for your loved
ones.
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Basic Money Management
Basic Money Management
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