Small business owners in Minnesota have put a lot of time and energy into their enterprise, watching it grow from a fledgling new business to a successful and fulfilling one. Of course, most business owners are consumed in the daily management of their business. They might not give much thought about what will happen should they unexpectedly pass away. However, death is unpredictable, so it is best to be prepared with the proper plan for business succession.
Of course, one can pass a business on to their heirs through a will or trust. However, there are other estate planning vehicles that can be used as part of business succession. For example, sole proprietors will want to execute a business succession plan. This includes details on the business’s assets and liabilities, along with any pertinent accounts and passwords. A successor can be chosen and trained while you are still alive, and, if you want your business to be sold upon your death, you can arrange the details ahead of time.
If the business has more than one owner, then a contract known as a buy-sell agreement is essential. A buy-sell agreement addresses what happens if one of the business owners passes away or can no longer make decisions on their own. It lists how much each owner’s share in the business is worth, and it can include provisions on whether your share will be bought out by the surviving owners, whether you wish to keep certain people from stepping into your shoes or whether you want your share to be sold. This way a family member will not inherit a share in a business they do not want to be a part of but cannot put up for sale, and the remaining owners are not saddled with a surprise owner they do not want to work with.
These are only some points to consider when executing an estate plan that addresses what to do with your business once you are no longer around to run it. Of course, estate planning is highly complicated, especially when dealing with such a complex asset. Therefore, it is important that business owners embarking on estate planning seek the guidance they need to ensure their final estate plan is comprehensive and in the best interests of everyone.