Estate Plans For Small Business Owners WRITTEN BY CHRISTIE TOURNET
A WILL DETERMINES
how your assets are
transferred when you pass. If you pass without a Will, then a court makes decisions about who inherits assets in accord with default state law depending upon the nature of the property and if children, or other heirs, exist. When considering a business as one of your assets, you may acknowledge customary reasons for forming a business to include limiting liability and providing a professional, coherent front to not only the owners, but also to your customers and vendors. However, in the absence of additional business planning, businesses are also governed by default state statutes. Often, those default rules can be at odds with the business owner’s intentions. So, how do you plan so that your business operates as you intended? An operating agreement drafted by the members can outline the rules for the business’ continued operations. The operating agreement can also address a business member’s interest in the event of divorce, death or bankruptcy. For example, a member’s interest is usually a substantial asset that will be left to a spouse, child or other beneficiary. But, will the business all of a sudden have to deal with a family member? Or, what if a spouse or child has no interest in the business? The operating agreement can clarify expectations for these situations. Further, a “buy-share agreement” provides guidance on how much a member’s share should be sold for and who can buy into the business. After implementing an operating agreement, thoughtful estate planning for business owners also includes 1) creating a Will that further clears the path for all asset transfers and clarifies specific business information and your intentions as to the business’ continuation or dissolution and 2) signing a power of attorney that permits the business to continue to operate in the event of a disruption or difficult time.
Christie Tournet & Associates, LLC, provides estate planning, estate administration and commercial law services. The practice is located at 1795 W. Causeway Approach, Suite 103A in Mandeville. 985-951-2177, tournetlaw.com. 26 Sophisticated Woman | January 2020