One often overlooked aspect of estate planning involves determining what will happen to a person’s business holdings after their death. These holdings are assets for the purpose of probate, and a failure to account for these assets can cause the court to apply the state’s intestacy laws and force a split or sale of a company.
Creating a business succession plan is one way to avoid this unfortunate outcome. These plans can also be useful to contemplate an eventual retirement or to prevent a business’s collapse in case of a sudden illness or injury. A Mount Laurel business succession lawyer could provide more information about the purpose of these documents and explain how they interact as part of a comprehensive estate plan.
Business Succession Plans as a Part of Estate Planning
It is important to have a business succession plan in place because of the impact that it can have on the probate process. Probate is the process that occurs whenever a person dies, and courts have the sole authority to determine the heirs to an estate.
Many people do not realize that the assets of a business are part of a person’s estate. As a result, it is vital to have a business succession plan that dictates what will happen to those assets upon the holder’s death. Options can include a direct transfer to a single heir, a sale of the company with divided proceeds to multiple heirs, or a splitting of ownership for the future.
These plans are essential to avoid the potential conflict that may result from a court’s application of the state’s intestacy laws. According to New Jersey Revised Statute § 3B:5-3, the estates of people who die intestate will split along complex lines between spouses, children, and parents. Having a succession plan can help prevent this outcome.
A Mount Laurel business succession attorney could help parties better understand the interactions between probate and these plans. They could also take the lead in drafting plans that avoid any unnecessary complications.
Formulating Plans that Provide Protection for the Future
A business succession plan can do far more than serve as a testamentary document. It can also be a way to protect one’s business holdings during their life. Especially in the case of small businesses or sole proprietorships, an owner’s role may be the only thing keeping a company going. As a result, a sudden illness or injury may leave the company without direction or leadership. A business succession plan can also provide instructions for what to do should these emergencies occur. Potential steps can include a transfer of ownership or the sale of the company.
These plans can also act as a way for a business owner to eventually retire by providing for a sale, transfer, or another outcome that will occur at a specific future date. The company’s board of directors or other owners have an obligation under the law to follow these directives. A Mount Laurel business succession lawyer could help to draft plans that provide short-term benefits and protections.
Reach Out to a Mount Laurel Business Succession Attorney Today
Making plans for what is to happen to your business in the future is an essential part of estate planning. These plans can function as testamentary documents that help to retain control over probate. They can also protect your company and heirs in case of a sudden illness or injury. Finally, they can help to plan for your eventual retirement.
There are numerous reasons to have a clear and effective business succession plan. A Mount Laurel business succession lawyer is ready to talk with you to understand your needs and draft the documents that provide the necessary legal protection. Contact us today to learn more.