When a person spends several years of his or her life building a business in Texas, all of his or her hard work can end up falling apart if he or she dies prematurely and has failed to do engage in estate planning. If the business is worth a million dollars, for example, an estate or death tax can be slapped on the business, thus reducing the company's worth by half. Then, ex-spouses, family members and co-owners may fight to get a piece of the business, essentially causing the business to go to zero equity. Estate planning may help to prevent this from happening.
With an estate plan, one can produce a buy-sell agreement, which may especially be beneficial if one's business has multiple co-owners. This agreement makes sure that if one owner dies, the deceased person's interest is immediately purchased by the other company owners. In this way, the deceased owner's beneficiaries will not unintentionally become the business's owners.
An estate plan can ultimately also help to guarantee that one's business will enjoy longevity, thus keeping one's legacy alive. This is because estate planning makes it possible for a business to transition to future generations successfully. Companies such as Walmart and McDonald's have maintained their competitive edge throughout the years because of well-thought-out estate planning.
Trusts, powers of attorney and wills are some legal tools that forward-thinking business people use to safeguard their companies in the event of unfortunate events by preventing their assets from being seized or depreciated. Estate planning also helps to decrease the hassle that occurs after one dies. Proper legal guidance may help business people in Texas to effectively create estate plans for even the most complex of businesses.
Source: The Huffington Post, "5 Things Estate Planning Can Do for You and Your Business", KC Agu, March 31, 2016