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Estate planning is important for everyone. However, if you are building your business, there are additional reasons why you need a comprehensive estate plan. The type of business you are building can have a significant impact on the provisions included in your estate plan. A Texas business succession planning lawyer can help you consider all relevant factors and goals to determine the best way to address the business interest in your estate plan.
Business Succession Planning for Sole Proprietors and Family Business Owners
If you are a sole proprietor or operate a family business, it is likely that your income and assets are significantly tied to the business. Sole proprietorships cease to exist after the owner’s death. The business assets may be sold to another person who may continue to operate the business. However, once the assets are sold, there is no further income from the business. A family business may continue to operate after a person’s death. However, if that person played a key role in the business, it may be challenging for other family members to fill the gap without a business succession plan.
Therefore, sole proprietors and individuals with a family business need to address key questions in their estate plan such as:
- Will my family need another source of income after my death? Do I have enough life insurance or other assets to provide for my family when the business ceases to operate?
- Who will take over my role in the family business? Will that person have the training and knowledge to handle business operations?
- Who inherits my interest in the family business? How will this impact the day-to-day operations of the business?
There may be additional questions to address depending on your situation and your business. The important step is to work with an estate planning lawyer to address the issues and execute estate planning documents to ensure your wishes are carried out after your death and your family is protected.
For instance, if you do not have a will, your assets become subject to Texas intestate laws. Intestate laws determine who is legally recognized as an heir and how your estate is divided between your legal heirs. Your business could be lost if your family fights over the business because they are not sure of your wishes because you did not leave a will.
Estate Planning for Partners and Shareholders
If you own an interest in a partnership, corporation, or Limited Liability Company, that interest may be subject to restrictions on transfers in the corporation, partnership, or LLC bylaws and operating agreements. You need to review your ownership interest with an estate attorney to determine the best way to include this interest in your estate plan.
Five Steps to Create an Estate Plan That Protects Your Business
- Work with an experienced estate planning attorney to identify your goals and desire for your estate and your business interest.
- Create a business succession plan that provides details regarding how the business is to be sold or transferred upon your death or incapacitation.
- Create a will that includes your business and other assets.
- Consider a trust to hold ownership of your business interest. Working with trust agreements can be complicated, so you want to seek experienced legal advice before transferring any business interest to a trust.
- Execute a power of attorney naming a trusted individual as your agent to act on your behalf if you become incapacitated, including the authority to act on matters related to your business.
Contact a Texas Business Succession Planning Lawyer for Help with Your Estate Plan
If you are unsure what steps to take to protect your business after your death, contact our Texas business succession planning lawyer to discuss your options. Contact the Law Office of Carey Thompson today to learn more.