Business creators work tirelessly to ensure success, but that may all be in vain if proper provisions are not in place to protect the business later on. An appropriate estate plan covers both personal and business interests. Michigan business owners can benefit from creating an estate plan specifically for the business they have worked to see successful.
A buy-sell agreement is one tool that is commonly used in these situations. It gives one owner the right to purchase the other owner's interest automatically in the event the other owner dies. This can prevent children or other family members from being forced upon business partners, which may be particularly important in situations where the deceased partner's surviving family member/s do not want to or know how to run the business.
Consideration should also be given to protecting the brand identity of the business and ensuring that the enterprise can continue to grow. It's possible to arrange for the business to continue to provide for the owner during his or her lifetime and for the owner's beneficiaries. One way to do that is to create a grantor retained annuity trust. This lets an owner transfer assets to beneficiaries and still reserves a source of income for the owner.
The options for creating an estate plan for a Michigan business and protecting that business are varied and depend on the exact needs and desires of the business owner. What works for one may not work for another. When a business owner is ready to begin as estate plan or wishes to update an existing plan, exploring the options and considering the wishes of the owner for the business in the long run is typically a good starting point.
Source: huffingtonpost.com, "5 Things Estate Planning Can Do for You and Your Business", Kc Agu, March 31, 2016