Generally, a person may wish to hire a probate attorney as soon as possible after the loss of the loved one. For business owners, the DC probate process can impact business succession. Thus, hiring a lawyer is specifically important for businesses—for individuals or decedents that are also business owners—to ensure that the business operations are not interrupted, which could ultimately result in the loss of revenue or inability of the business to operate.
Business Succession Planning
Business succession planning is generally planning for a business after the death of either a partner or an owner of a business to ensure that the business continues on after that person’s death. It may involve the transfer of the ownership or the leadership or both to the next generation.
Generally, if a person owns an interest in a business in his sole name that interest passes according to the terms of his or her last will and testament and subject to probate.
Business succession planning may allow for the continuation of the business and smooth transition of the business to the next generation.
Considerations in Business Succession Planning
There are two aspects to consider when estate planning for a business owner, the business owner’s estate plan and the future of the business itself. It is important to coordinate business succession planning with the business owner’s individual estate plan. For many individuals, ownership in a family or small business may comprise the majority of his or her wealth. Partnership or other business agreements may determine how the business interest passes at death. For example, a partnership agreement may allow other business owners to have a right of first refusal to purchase the interests of a deceased owner, or there may be a business agreement that a spouse cannot hold the business interest. Partnership agreements and corporate bylaws may need to be reviewed to coordinate a business owner’s estate plan.
In addition, the business owner may also wish to plan for the future of the business to ensure that it continues. This may involve modifying or creating policies, bylaws, or partnership agreements that provide for the continuation of a business at the exit of a business owner.
How a Business Owner Can Simplify the Probate Procedure
A business owner in DC may prepare for the unexpected by creating a comprehensive plan that addresses both the business owner’s personal or non-business assets as well as the business holdings. In addition, with good planning, a business owner may also be able to prepare the business to transition smoothly and continue to operate successfully after his or her death.
How a Lawyer Can Help With Business Succession Planning
A person may wish to hire a probate attorney for business succession to advise him or her regarding the transition of the business on to future generations, the preservation of the asset for his or her loved ones, and to review if there is adequate liquidity in the estate to provide for administrative expenses and taxes. In the event that someone dies owning a business, then a probate attorney may be helpful to navigate both issues regarding the business and also the regular probate administration. A probate attorney can assist with providing an estimate of cash needs necessary throughout the administration process so that a timeline can be created to ensure liquidity to pay for inheritance, estate, and income taxes, and other administration expenses.