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Business owners and estate planning

It is important that New York closely-held businesses have strategies for contingencies that may arise upon the death of an owner. There are legal documents that can simplify the transfer of power and the continuation of day-to-day operations of the company during this time.

Everyone should have a will that delineates their wishes concerning the distribution of assets. This is critical for business owners as well because there is more at stake than inheritances. There is the welfare of the company and of the employees to consider. A business owner can name an executor in a will and state how the ownership interest will be transferred.

Business owners should also have a written plan of succession that sets forth who takes over the management of the company, lays out hiring policies and makes arrangement for the positions and compensation of family members within the business. In the case of multiple owners, there should also be a buy-sell agreement. A power of attorney could be useful in that it could appoint a trusted individual to handle day-to-day tasks like paying bills until the issues are settled.

Some owners may want to put their interests in to a trust. It can be formatted as a revocable trust so that the owner acting as trustee can make business decisions, but upon death a successor trustee takes over. Trusts are also not public documents, so sensitive business information can be protected in a way they would not be under the provisions of a will.

Making certain a company will survive the death of an owner can be complicated. Often issues arise that are not foreseen by the owner. There is also the possibility of family disputes over who will take over the company. An attorney can assist with the preparation of the appropriate estate planning documents that can address these and other contingencies.

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