Your business is not inherently immune from probate – the lengthy, time-consuming, often-expensive legal process that occurs following one’s passing. Without proper preparations, this means the business’ operations can be derailed and held up indefinitely, potentially impacting its finances.
In a world where one lost day can make or break a company, being stuck in business purgatory for a stretch of time may be crippling. This is why a business owner should integrate a succession plan with their estate planning.
Strategies for avoiding probate
For many business owners, probate is something to avoid, and there are strategies for doing so. There are a few common tactics at your disposal, some of which will work better for some situations than others. This might include:
- Placing business interests into an appropriate trust
- Establishing an ownership plan, through something like a buy-sell agreement or gift of stock
- Utilizing legal tools where sensible, including a will and power of attorney
- Using a valid transfer designation to pass on relevant real estate
These types of decisions, when employed in a tactical manner, can reduce or eliminate any potential impact of probate on your business. Each touches elements of both succession and estate planning, making it vital that you approach these tasks simultaneously.
Planning ahead is necessary
None of these can be done on a whim. In order to actually pull off these legal maneuvers, you have to plan ahead. Consider all of the important questions and, in consultation with an attorney, begin mapping out answers. Your goals will help determine the most beneficial next steps, including how to structure and execute certain agreements.
Business succession and estate planning are by no means easy topics. But doing the work now, rather than leaving it for others to figure out, can save loved ones and colleagues a lot of hassle – and will help ensure your business continues running on all cylinders.