Writing wills and making future plans is a good idea for any adult. But, for business owners, the stakes are even higher. California individuals who own all or part of a business should consider these important ways that estate planning can protect their loved one's interests and prevent litigation down the line.
The first way that estate planning can be beneficial is to clarify the buy-sell agreement in businesses where there are multiple owners. In almost every business where there are partners, one will die before the other. In these cases, it helps to have a buy-sell agreement that sets parameters around who can buy out the part of the business belonging to the party who passed. When someone buys out a share in a business, it can impact that business' outlook, so this is an important consideration.
In a similar vein, a succession plan can be looked into as part of estate planning. This type of plan names new leadership for a business should its owner pass away. It can be a critical document when preparing a business for the future, both by protecting the interests of the business and preventing arguments about who should take what role.
Finally, the third benefit of estate planning for business owners is tax-related. By making strategic moves, such as gifting family members shares in the business or arranging for installment payments, business owners can prepare to have their estate executed without risking the need to liquidate the business to pay taxes. Overall, it is clear estate planning is of particular importance for business owners. Contacting a lawyer in California is a good first step for those who want to protect their business and their families after they pass away.