When you own a business, you may become be so consumed with running it from day to day that you don’t really think much about what will happen to it after you are gone. While preparing for one’s own passing is often unpleasant to consider, particularly if you have reason to expect to live for many years to come, it’s still important to make sure you have legally documented your wishes — for the good of you, your beneficiaries and your business.
One of the key reasons to make sure your will covers your business is that, if it does not, your close family members may end up inheriting your business, whether or not they want to and regardless of whether you had other plans for your company.
Even in cases in which your children are minors, they could still inherit your business, and without an adult in place to take care of its operations, your business may essentially dissolve when you pass away. Particularly if your business is valuable, a failure to provide for its future in your will doesn’t just hurt your business, it also negatively impacts your family.
Executors can help protect your investment
Because of the risks involved with not leaving your business in a will, ensuring you’ve put everything in place ahead of time is essential, and it’s one of the best ways of providing security for your business and your loved ones. Among the key steps in preparing your will, as far as your business is concerned, is naming an executor to handle decision-making related to the company after your death. This is crucial because, without an executor in place (or if you don’t have a will in the first place), the court will appoint an executor.
To ensure your business is transferred or sold according to your wishes, you want to be certain that the person in charge understands your wishes and their duties. The risks associated with a court-appointed executor are too great to leave anything to chance.
Another task you may need to complete is to consider restructuring your business. If you are the sole proprietor, your business cannot simply be left to somebody else in your will. To avoid having your life’s work disappear after you’re gone, it may be necessary to restructure your business as a closely held corporation. As a separate entity, a corporation continues to exist after you die, and you can leave your controlling interest to a person of your choosing. Although your estate will still be taxed on the value of your share, this approach at least allows your business to continue to operate without you.
The process of preparing a will and establishing what you want to become of your business in the event of your passing is often complicated, stressful and just about the last thing many business owners want to address. That’s why it is so important to go through the process with an experienced business attorney, whose knowledge of the process and understanding of estate planning and business law can help you reach your goals and give you the peace of mind you need for the future.
BoltNagi is a well-established and widely respected business law firm serving clients throughout the U.S. Virgin Islands.