As stated before, as a business owner, it is important to prepare for the worst situations when times are good. One of these situations that is often neglected is death of the owner. While shareholders’ agreements, buy-sell agreements, and key person insurance can all address this situation, there are areas outside of those listed above that must be considered.
Naming a Successor
When dealing with the possibility of death, it is important to name a successor. Whether a family member or a third party, this decision should be made well in advance. When making this decision, be sure to consider the vision for your company, the needs of your company, as well as your partners and family members. Ask yourself: who is best to take my place? Who will continue to run the company the way I want it to be run? Who will allow for the smoothest transition of leadership? Remember the answers to these questions are important and are not simple, so take time to make sure you have come to the proper conclusion. Once you have made your decision, be sure to advise your business partners and family members of your wishes.
Considering Tax Issues
Any business event, such as death of an owner, will cause tax implications. Whether your interest in your company is sold to a third party or transferred to a family member, tax issues will arise. Once you have decided who should succeed you in your business, it is important to discuss your decision with a tax advisor. This person will be able to describe the tax implications that will occur and help you make a plan that will mitigate the tax burden as a result of the business event.
Organizing Your Personal Life
Many business owners see their businesses as “their baby,” so it is important to make sure your business is treated just like a member of the family, especially if most of your net worth is tied up in your business. While you may have your business affairs in order, it is important you do the same with your personal life. Therefore, make sure that you have a personal will and that it is up-to date. Doing so will ensure that your wishes are met should the unthinkable occur.
By staying ahead of possible bad situations, your company and family will continue to thrive no matter what occurs. In order to do this, it is important to have the proper plans in place. At Sallen Law, LLC, we can help you organize both your personal and business affairs. If you are looking for an attorney in Montgomery County, contact us.
