Incorporating Your Arizona Business Partnership Into Your Estate Plan
Expert Scottsdale Business Attorneys Share Estate Planning Tips For Business Owners
After all the hard work you put into building a business and making it successful, you probably don’t want to see that business fall into the wrong hands if you die unexpectedly. You might want your children to run the business. At the very least, you likely want them to inherit the profits from what you’ve built. You can make sure that your vision for your business is realized even after you die by working with an experienced Phoenix business attorney to create a succession plan.
You can’t just decree in your personal will that a certain person will inherit your business. There are more things you need to consider, and your Arizona business attorney will walk you through the laws that are relevant to your business. Here are a few things you might discuss:
Consider Your Business’s Liquidity
Not every business will be ready to sell or to transfer upon the owner’s death. Some businesses may have debts that must be satisfied, but they may not have enough cash to cover them. In that case, assets would need to be sold to satisfy those debts.
You’ll need to evaluate your business’s liquidity, or how much of it is in cash or assets that can be quickly used to satisfy debts or other needs. Your business will also need enough liquidity to pay estate taxes (if they are due) upon transfer, or you will need to have another plan for that.
Make a Plan For Incapacity
You may not die unexpectedly, but you may become physically or mentally incapacitated and unable to run your business. You should make a plan for what will happen in this scenario and who will run the business or assume ownership.
You may develop a plan that allows you to retain an ownership share of the business while someone else manages it. Talk through the possibilities with your Gilbert business attorney and put the appropriate plan in place. Otherwise, there can be a lot of legal wrangling that will put your business in jeopardy while things are resolved.
Consider a Family Limited Partnership
A Family Limited Partnership (FLP) can help you to transfer your business ownership over time if you want to keep the business in the family. Under an FLP, duties and ownership are transferred as specified over time. You still maintain control over many of the day-to-day operations, but you progressively transfer responsibilities in a way that lines up with your own eventual retirement.
Using an FLP not only provides a gradual transition of power so there are no major shocks to your business operations, but it also offers tax advantages. Your Tempe business attorney can help you understand what the tax obligations would look like with an FLP compared to other transfer agreements.
Consider a Buy-Sell Agreement
You may not want to pass your business onto your family members. But you may also want to be sure that your loved ones get a good price for your business. You may want to consider entering into a buy-sell agreement now with someone who will want to buy your business later (often a co-owner or valued employee). The agreement will stipulate the terms of the sale, including the price, so that your wishes will be honored and you will be sure of your family getting a good price for the business. Your Arizona business attorney can help you create the right agreement so that there are no legal questions or challenges to it after you pass on.
Your business is part of your legacy. You will want to be sure it goes to the right person and is being handled in a way that you deem right after you die. You will make an estate plan for your home and other assets, so why wouldn’t you do the same for your business? Meet with an experienced Arizona business attorney to learn about your options for succession planning and what measures you need to put in place.
Contact Arizona’s Leading Business Lawyers To Secure Your Company’s Future
The attorneys at Denton Peterson Dunn are ready to help you secure the future of your business. We can help you understand the options for succession planning and then put the right documents in place to ensure that your wishes are carried out. Our experienced business attorneys will help you understand all the potential obstacles and challenges so that you can put an iron-clad plan in place. We serve clients throughout the Mesa, Scottsdale, and Phoenix areas. Contact us today to schedule a consultation with a business attorney and start planning for your business.