For many New Jersey business owners, every reasonable attempt is made to keep emotion outside of business decisions. While this approach is laudable, it is very rarely successful. Businesses involve people, and when people are part of any equation, emotions are part of the package. Whether a business is family-owned, closely held or publicly held, a wide range of problems can arise when an owner dies. The following estate planning tips can help business owners create a plan that can minimize those areas of contention.
The first thing that can and should be done is to create a comprehensive estate planning package that addresses the specific needs of the business. In some cases, a buy-sell agreement is the best approach. These agreements outline the value of a business and lays out a plan for distributing that value to the appropriate parties. It is usually a good idea to share the details of this plan with everyone involved, so that there are no surprises when the time comes to put the plan into motion.
Another important component of a business owner’s estate plan is the proper use of escrow and trusts. In some scenarios, an escrow or trust can be used to hold stock until shareholders complete the agreed-upon terms. Once that has taken place, the stock can be transferred to the appropriate parties.
These are just a few examples of the estate planning options that are available to New Jersey business owners. There are a number of other tools that can be put to use to create a working estate plan. No matter what set of needs a business owner holds, he or she should rest assured that there is a solution available to facilitate the desired outcome, which is a smooth transfer of business interest to the appropriate heirs.
Source: Forbes, “Don’t Be So Emotional: Drama-Free Business Estate Planning“, Steve Parrish, Nov. 9, 2015