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Small business owners often have their hands full on a daily basis and relaxation is in short supply. There is always a list of “to do’s”, one more thing to do, buy, read or set up. You know that your time is limited, so here is a short no-nonsense list on what to consider when planning for your business once you are gone.
The three basic options
If your family or beneficiaries are depending on the income from the operation or sale your business, it is especially important for you to take the time to set up a plan now. The other option is to close the business down when you are gone. Either one of these 3 options, (keep it running, sell it, or shut it down), needs a plan.
Why you need to be involved now
Do you have a partner (either business partner or life partner/spouse) that is involved in your business on a daily basis and knows how to do each and every thing that you know how to do? Most people do not. Imagine that one day you are suddenly no longer there. Your spouse or partner is grieving your loss while trying to take care of their own daily responsibilities. They may become overwhelmed or ill. There could be business failure, loss of income, and even lawsuits. Another reason to plan now: if you don’t decide how you want to distribute your property after you die, the law will do it for you.
Benefits of planning ahead
Some benefits of planning ahead are peace of mind for you and relief for your business or life partner. By planning ahead, you are thinking of your loyal employees, your customers and your suppliers. You are being considerate of those who helped you survive financially for all the time you have been in business.
So many options!
Make sure you have a valid Last Will & Testament that leaves your property to your beneficiaries. Depending on the way that your business is set up (sole proprietorship, partnership, corporation) you may need other paperwork outside of the Will. It is not possible to list all of the different options, because it really depends on your exact business set up, whether you own all or part of the business, whether it is community property with your spouse, whether someone else already has an option to purchase or buy you out, and other factors.
What you do NOT want
There are two things you definitely do not want. The first is NO PLAN, which can leave everything in chaos. The second thing that you do not want is to have is two or more CONTRADICTORY PLANS. Conflict can occur if you have a Last Will & Testament that states one thing and a business contract such as buy-sell option or Partnership Agreement that says something completely different. Or, you have a Will but it is unclear in some way as to how your property passes or who gets the business. This type of ambiguity can lead to lawsuits, broken relationships, lost profits and business failure.
Who can help
An attorney who knowledgeable and experienced in Texas estate planning law, Texas probate attorney and Texas business and corporation law can help you understand all of your options. There are many documents that may come into play, such as A Last Will & Testament, Trusts, Corporate Resolutions, Partnership Agreements, Buy-Sell Any documents that are drafted and signed need to be consistent with each other. Know your options.
What to do before the consult
If you decide to have a legal consultation, it is helpful to have the following pieces of information available to make the most of your time with the attorney:
- What type of business do you have (sole proprietorship, corporation, partnership)
- What date did the business start?
- Who are the owners / shareholders / partners and what are their percentages of ownership?
- Who do you want to have your share of the business once you are gone?
Here to help
We are here to help business owners plan for the future. Our attorneys have experience in business law, estate planning and probate law. We have the knowledge and experience to help you look at this from all sides. Attorney Bob Kalish has been serving businesses, individuals and families since 1984.