Business Estate Plan
One of the main purposes of estate planning is to help people avoid the probate process, which can be drawn out, expensive and potentially include challenges to the validity of a will. This is particularly important for business owners, who will inherently have more complex estates and will want to be able to pass their business down to the next generation without any unnecessary complications.
Following are a few examples of estate planning strategies that a business owner can use to protect their business from probate.
Place Assets into a Trust
Placing assets into a trust will not resolve all of your issues, but it is certainly an important step to help you avoid probate.
Corporate Stock and Business Interests
If you have interest in a business in the form of corporate stock, you simply place those stocks in the trust. Similarly, if you have a partnership or LLC membership interest, you can to protect your interest in the business in a trust. Transfer or assign the interest using a revocable trust will avoid having to relinquish any control of your business shares.
Examine the Title of Real Estate
If you have a business that is a separate legal entity that owns real property, the real estate will be considered an asset of the business.
In some cases, the real estate will be owned separately, and the owner of the property rents it to the business. In such a circumstance, you can avoid probate through titling the property in joint ownership with right of survivorship, with a transfer on death deed or in a life estate. You may want to own real estate in an LLC or Corporation with the interest held in trust.
Create a Business Continuation Plan
Separate from your estate plan, you should have a business continuation plan in place within your company. The plan could include an agreement in which the other business partner(s) buy out your share in the company, or your share could be designated to be passed to another person through various arrangements.
The more you can plan within your company in advance, the easier it becomes to handle the business in your estate plan in a way that will avoid any unnecessary conflict.
Keep Assets Separate
Finally, it is important that, as much as possible, that you maintain a clear distinction and separation between personal and business assets, otherwise it can become very difficult to untangle the two in your estate planning.
This is something you should be doing already for your taxes, and to help shield yourself from liability. But it is especially important if you are to avoid probate with your business assets.
For more information about some of the ways business owners can protect their interest in the company and avoid probate with a business estate plan, contact an experienced estate planning attorney at Baker Law Group, P.C. today.
About Baker Law Group
Baker Law Group specializes in asset protection, business formation, estate planning and Administration, and Elder Law.
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