Death is not anyone's favorite topic, just ask any estate planning lawyer how hard it is to get people, especially those under 65, to agree to make an estate plan. However, avoiding the subject is not good for you or your business.
If you own and run a viable business, maybe you've thought about what will happen to it when you're no longer around. If you have a spouse, children or family members that you'd like to pass it along to, that doesn't automatically happen if you haven't properly planned. If you own a business with partners, you are hopefully aware of what happens to your portion of ownership after you're gone. Assuming your spouse or children will be able to take over your part of the business is foolish.
If you have no plans in place for your business, it may need to be liquidated. That means your dreams of passing it to your children, spouse, nieces or nephews, are up in smoke. Not to mention that there could be undesirable tax consequences if you haven't planned properly (or at all). In a business with multiple partners, it's likely there are provisions that your share of the business may pass to your estate, but must be sold to your remaining partners. Even if your surviving spouse or children are allowed to remain in the business, they are probably prohibited from making any decisions or exercising any voting power.
If you're a solo business and don't regularly involve your spouse or children in its affairs, who is going to know where your business bank accounts are, where any business assets are kept and how to find your records? If you have a business that generates a lot of money that you keep in the business, it's imperative that someone else knows where the money is held in the event of your death.
No one wants to think about death, but if you are a business owner, it's absolutely critical to plan for your business after you're gone. If you don't, you're leaving your family with a mess, possibly large tax bills and in the worst case, nothing at all if you haven't properly provided for them with a smart estate plan and business succession plan.
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Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer near you, we offer several convenient locations.