California business owners would do well to plan for the eventual disposition of their estate after they pass away. It may require special preparation to ensure the healthy function of the business and the smooth transition of authority after the death of an owner.
Beyond the basics of the last will and testament, entrepreneurs who have partners or co-owners should have buy-sell agreements in place The buy-sell agreement determines the disposition of their interest in the business after their death or incapacity. It can also have applications in the event of divorce or bankruptcy. This may be accompanied by a succession plan for the business, which will ensure that the enterprise does not suffer from a difficult transition from one owner to another. This type of document can also contain provisions regarding dispute resolution, which can be important when family members are involved.
A durable power of attorney can also be a crucial part of a business owner’s estate plan. With the type of document, the owner appoints a trusted individual to act as attorney-in-fact in the event that the owner becomes incapacitated and unable to make decisions that involve the company. While a buy-sell agreement can also address this issue, a power of attorney can be important if there is only one owner.
An estate planning attorney might recommend under some circumstances that a client’s ownership interests be placed in a revocable trust. This allows the owner to maintain control over those assets while allowing them to be passed on to the stated beneficiaries without having to go through the probate process.
Source: Business, “5 Estate Planning Tips for Entrepreneurs”, Fred Cohan, Nov. 8, 2016