When an owner of a business passes away, a company may survive unaffected, but the majority of the time, sales and service suffers. A business that loses a founding member within the first few years of operation will experience a drop in sales of at least 50% and have a higher rate of failure. The founders of a company are usually the driving force behind the company and without their support, a business, especially a family business, may not prosper. One way to increase the chances of your business succeeding is to create a will that protects your professional legacy. These tips for creating a will when your family owns a business together help reduce some of the problems associated with an owner passing away.
Plan for Succession
Typically, each member of a family business has a clearly defined role or is aware of the tasks that are expected of him or her. One way to keep the business operating smoothly is by planning for your succession when you are working on your estate. Clearly outlining who will succeed you in your duties and role within the business aids the transition process and helps to protect your business in the future.
Discuss How a Death Will Affect Business Finances
A family often invests a great deal of their personal financial resources into their business, especially if the journey from founding to profit is a slow one. If a family member passes away, the loss of this or her financial or physical contributions could seriously impact the way the business operates. Consider how to transfer ownership and assets in a way that does not lead to serious tax implications, a long probate process, or other financial problems. In addition to this planning, have frank discussions about the financial health of the business so that everyone who has an ownership interest is aware of all major aspects related to paying for your company to succeed without you.
Prepare for Potential Rivalries
Disputes that arise after a family member passes away are often influenced by past rivalries. Siblings, in-laws, and others within the family who have set their differences aside for the sake of the business may be unable to restrain themselves once an owner has passed away. Do what you can to address any issues that may lead to conflict such as bequests or business transition requests when you are creating your will so that your family is not surprised at a time when they are grieving. Also, choose an executor who is aware of the issues and is someone that your family or other business partners trust.
Family businesses are difficult to establish and run, but ultimately they are the cornerstone of our country’s economy. When a family member who was also a professional colleague passes away, it can be devastating in many ways. One way to help your family and partners during this difficult time is by retaining an estate attorney who can aid you in creating a will that will secure your legacy for your heirs. The team at MMZ Law is prepared to offer you the advice you need to determine the best way to include your business in your estate plan. Contact our Claremont, California office today to schedule a consultation so that we can begin discussing your needs.
BROUGHT TO YOU BY:
MMZ LAW, A PROFESSIONAL CORPORATION
341 W. 1st St. Suite 100
Claremont, CA 91711
MARIVEL M. ZIALCITA is the founder of MMZ LAW, A Professional Corporation, where she practices in the areas of Elder Law – Medi-Cal Planning Asset Protection, Trust & Estate, Special Needs, Conservatorship, Trust Administration, & Probate. Ms. Zialcita is a frequent speaker on trust and estate matters and holds memberships in the State Bar of California, Trust and Estate Section, The San Bernardino County Bar Association, Wealth Counsel and Elder Counsel. She currently assists in the pro bono legal services program at the James L. Brulte Senior Center in Rancho Cucamonga, California. She is based in Claremont but assists clients throughout Southern California.
This information is educational information only and not legal advice.