Whether youre the sole owner of a business or a partner in one, you need your Minnesota estate planning attorneys help to make sure your business interests are properly transferred to others when you pass away.
Since co-ownership of a company or corporation requires unique legal documents and planning coordinated with other owners, this article will simply address the concerns of sole proprietors who fully own and run their own businesses.
The Probate Process and Your Business Interests
If you die without a Will or another estate planning tool, most or all of your business assets will probably have to go through the Minnesota probate process. While this may sound simple enough, few people want their businesses to fully cease operations upon their death instead, they want to pass all or most of their business interests on to others.
The following section contains useful questions that you and your lawyer must address now so that all of your business and personal wealth can be passed on to others when your life ends.
Critical Questions Requiring Your Immediate Attention
If you want your loved ones or others to benefit from all of your hard work in the future, you must decide how you want to pass on all of your business interests to them upon your death. This can usually be best handled while creating your overall estate plan. Here are some of the questions you must answer:
- Who do you want to run your business when you die?
- Which business assets should you leave to one or more beneficiaries?
- Which family members or other parties are most capable of successfully taking over the reins of your business?
- Which legal instruments are best suited to passing on your business interests?
- If you do not want to see your business continue, how should you go about planning for its demise?
Keep in mind that such planning can also prove useful if you become too physically or mentally disabled at some point to keep running your business. All careful business owners must prepare for their deaths or other unexpected events since Seventy percent (70%) of family-owned businesses fail to make a successful transition into the second generation. (Source: The American Bar Associations Guide to Wills and Estates, Third Edition).
What Special Challenges Do Businesses Often Face When an Owner Dies?
According to the American Bar Association, most businesses face major turmoil upon the serious impairment or death of a business owner. These problems usually involve:
- Business financing. What is likely to happen to all of your financing upon your death? What can you and your lawyer do now to minimize these potential problems?
- The potential loss of customers. How can you plan ahead to try and hold on to most of your current customers when you pass away? Should you go ahead and name one or two possible successors in legal documents? (Always speak to such individuals in advance to be sure they’re willing to take on this major responsibility). Its usually wise to name people your customers already know;
- The loss of key business contacts. What arrangements can you make now with your business franchisees, distributorships, and suppliers that will help in the future? For example, should you immediately begin delegating more of your official duties to other younger, fully trustworthy employees? As the ABAs Guide to Wills and Estates, Third Edition says, [This] issue of control should be addressed through a [W]ill, a living trust, or another appropriate legal document;
- Deciding whether or not your business should just be sold. Should your estate plan simply provide for selling your business upon your death? If so, you’ll need to make sure your current business plans will help with this later transition. Also, you must make sure your tax planning is in order;
- Problems with the stock they’ve issued. If you’ve issued any stock in your business, should you now arrange for one specific person to receive a controlling amount of the company’s stock immediately upon your death?
As you can see, there are just some of many questions you and your lawyer must now address concerning your future business plans. Take the time to create a comprehensive estate plan that will fully benefit your family and all other beneficiaries.
Small Business Estate Planning in Minnesota
Questions about small business estate planning in Minnesota? Contact the Flanders Law Firm today. The firm offers free consultations to all potential clients. Call (612) 424-0398.
