Probate, Estate Planning and Trust Law
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Transferring business assets in estate planning

Many business owners focus their attention on the day-to-day issues they encounter during their usual operations. They may not spend much time thinking about what will happen to their company if they suddenly pass away. Failing to put an estate plan in place that deals with these business assets can cause significant problems for their loved ones.

There are very unique issues that must be addressed when determining how to handle business interests in estate planning. Families need to be informed of all their options before they make any decisions, as the wrong choice could have a severe negative impact upon the future of the entity. This posting discusses some of the steps that people can take to ensure that their family businesses are protected at such a difficult time. 

Put a transition plan in place

When the owner of a business passes away, either expectedly or unexpectedly, it will have an effect on normal everyday matters. Close family and friends will be struggling with the loss of a loved one, so it is essential that there is a plan that they can turn to when questions arise about the future of the business.

The estate plan should ensure that enough money is set aside to continue with ordinary activities. If the funds are tied up due to the probating of the estate, it is possible that bills will remain unpaid. Suppliers may stop delivering critical items and this could cause the business to fail to deliver services or goods in a timely manner.

Know exactly what assets must be passed down to specific people

Some business owners need to be sure that they understand exactly what assets they have when creating their estate plans. Lack of specificity in the estate planning documents could lead to confusion or contests over the assets. Any conflicts might result in costly litigation, which will have a direct impact on the business's bottom line.

Discuss your future plans with designated successors

If you know who you want to carry on the functions of the business, you may wish to discuss this with your family so that they understand their role in the future. This can also help all parties be on the same page during the transition stage. It may also help limit disputes that may arise between loved ones after you pass away.

Visit an experienced estate planning attorney to learn more about your options in passing along your business interests. Your attorney will be able to create a comprehensive estate plan that meets your specific demands.

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