As warm summer breezes slowly transform into cool Fall days, we begin dusting off the to-do list we started pre-June. For many, it’s weighted by our every-day business needs: preparing for tax season, annual reports, charitable holiday giving, and rearranging our work schedules to better align with our kids’ new school schedules.

While I’m sure your list is already fair in length, you might want to tack on one more thing: estate planning for your business.  As shareholders, partners, entrepreneurs, and sole proprietors, we tend to treat the revenue as if it will always be steadily providing for college tuition, mortgages, groceries, and pre-planned vacations. But what if death doesn’t offer you a gracious forewarning? What if you die suddenly and leave your loved ones stranded in a sea of grief, stress, and debt? Unfortunately, simultaneously losing a loved one and the financial instability that can result is a real fear.

Where Do I Start:

Succession Plan: First, you need to decide: will your business die with you? Do you want to pass it on to a loved one, or sell it? The choice is yours, but you have to make a choice. Don’t leave the business, which you worked so hard to establish, to deteriorate as your loved ones scramble to figure out what to do and how to do it. If you wish to pass it on, decide to whom you would like to pass it, and prepare them. If you would rather sell, do some research and help your loved ones sell your business with ease and low expenses. As a business owner, a succession plan should be part of your estate plan, which should be created and/or updated by a trusted attorney well versed in this area of law. Here’s a good place to start.

Buy-Sell Agreement: If you’re in business with someone other than yourself, this is a must-have document. This is basically the Will of your business share that outlines an agreed upon plan for what happens when and if one owner dies or becomes incapacitated. Do you want your heirs to sell your share? How much do you want to sell it for? Who do you want (or not want) involved in your business after you have passed away? How will your share in the business be valued?

In order to answer these questions, you and everyone with a stake in the business needs to negotiate this agreement. Ideally, this document will be established when the business is still young and starts acquiring value. But it’s never too late. In fact, establishing a buy-sell agreement with a well-established business is sometimes easier because the parties are well aware of the business revenue and risks over the last several years. Without a buy-sell agreement, your beneficiaries may be forced to run a business that they either don’t want, can’t sell, or a combination of the two. Or they may be forced to negotiate terms of a sale without the knowledge that you have of the business, putting them at a disadvantage.

Will and Trust Provisions: Let’s get morbid for a second. Picture the reading of your Will: everyone is stressed and teary-eyed as they are told who will receive what of your lasting memories. You’ve left your entire business to your only daughter, and leave it up to her to manage what’s left. Taking after you, she’s ambitious and concerned that everything is in order as soon as possible. However, when she goes to the bank, she’s locked out of your accounts. She attempts to open your business laptop but, alas, no success signing in. And, even if she did access your laptop, she would be faced with more brick-walled credential pages for your email accounts, banking sites, confidential files, and other password-protected files and software.

In your Will or Trust, it is imperative to say who inherits the profits of the business and who succeeds you in the business, if anyone, as these may be two different people. Otherwise, no one will be able to do these things after you are gone, making it difficult to do things like make payroll, deposit checks, order inventory, pay the expenses of the business, etc. The length of this period of instability can make a or break a company. If brief, most employees and suppliers will hopefully stick with you. But as this period stretches out, employees and suppliers may lose confidence and move on, jeopardizing all that you have worked for.

It is also important to include a provision that lists updated log-in credentials unlocking all of your technology and business accounts. You can determine whose eyes see this list and, therefore, limit access to only those you trust to manage these accounts. Remember to update this list regularly by writing them in a notebook and locking in a safe or safe place, or using one of many numerous online resources that act the same way.

Not A One-Size Fit All Plan

Depending on the type of business you own, your role in the business, and what you want to happen to it after you are gone, will determine what documents are needed to protect your interest in the business. Some of the most commonly drafted documents for succession planning include Powers of Attorney, insurance policies, Wills, Trusts, and Buy-Sell Agreements. The right combination for you is one that makes the transition process as quick and seamless as possible while achieving your goals.

Nervous? Overwhelmed? Let Us Help You Get Organized!

If you’re ready to get down to business, contact a trusted attorney to learn the unique estate planning documents that your business needs to stay alive. Luckily, we have several trusted attorneys ready and waiting to assist you! Contact us today for a free consultation: or 248.399.3300.