By: Corey Moore – Published in the BizWest Thought Leaders column in October 2018
If you are a business owner, do you know what will happen to your business in the event you pass away or become permanently disabled? Every business has its own complexities, but let’s say, for example, ownership is divided equally between you and a business partner. If you pass away without a plan in place, how well would the business run if your dependents suddenly became partners with the authority to make important decisions? On another note, what would happen if your child who has been working in the business suddenly becomes partners with siblings that have no knowledge of daily operations? Without a proper plan for the succession of your business, conflict is a real possibility. In some situations, these conflicts can be easily resolved. However, in other circumstances it can result in costly litigation and the deterioration of family relationships. One option to avoid these conflicts is to incorporate a buy-sell agreement into your business as well as your overall estate plan.
A buy-sell agreement can provide a clear path for the succession of a business should certain events occur such as death or permanent disability. The benefits of a buy-sell do not only benefit those retaining the business but can also provide necessary liquidity for your loved ones. By using a buy-sell agreement you can ensure the continuation of the business you toiled over for years while avoiding the conflict that so often arises upon someone’s death.