BRITISH COLUMBIA – Have you thought about what would happen to your business in the event of your sudden passing or becoming incapacitated? An estate plan will help protect your business, family and business partners from these kinds of unexpected circumstances. Here are four legal tools you should consider adding to your plan to help transition your business to the next generation:
General Enduring Power of Attorney (POA): For most business owners, an estate plan starts with this legal document. It’s used to appoint an agent to make decisions on your behalf under extraordinary circumstances. If you don’t have a POA in place for unfortunate events, your business partners and family members may be put in a very difficult position
Your will: If your will does not address the business, the most likely result will be your business being incorporated into the estate. Taking the time to thoughtfully plan for succession in the event of death for the business owner will help ensure stability for the future of your business and reduce stress on loved ones.
A Buy and Sell Agreement: This binding contract requires one person to buy and another person to sell their stock for a given price if certain events occur. The most common instances of forced buy and sell are in the event of death or disability. A well-drafted Buy and Sell Agreement is one of the most valuable tools a company can have to protect its value in the event of death. Without it, a healthy business may depreciate or the remaining owners may be forced to work with strangers with no expertise within their business.
A Shareholders Agreement: If you’re not the sole shareholder of a business, your estate plan should include a properly drafted Shareholders Agreement. This document will ensure the rights and obligations of various shareholders are taken into account, as your will must conform to the Shareholder’s Agreement.
A great first step to create a comprehensive estate plan is to talk to an expert. Call me for advice on how to structure your business and protect your family, business partners, and legacy.
Danny Zich is an Estate and Trust Specialist with Concentra Trust* and Coastal Community Credit Union. For more info, call 250-713-0172.