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WILLS & TRUSTS FOR BUSINESS OWNERS

Posted on October 21, 2013 05:46 PM

It is extremely important for business owners to have a will and a trust in order to avoid probate.  Probate is the court process that is used to notify heirs and creditors of their rights after a person dies.  The beneficiaries do not receive the assets of the estate until all fees and expenses of the decedent have been paid.  Probate is usually much more expensive and time consuming than taking preventative legal measures ahead of time.

Avoiding probate will help ensure that the business can be maintained.  While the business may be sold when the owner passes away or becomes disabled, it is important to maintain the goodwill of the business or its value may substantially decrease.  A trust can be used to make funds available immediately and a successor trustee can continue to run the business if the original owner is unable to do so.

Even if there is a buy-sell or cross purchase agreement in place, it is possible that there may not be enough liquid assets or insurance to buy out a deceased or disabled owner.  When this occurs, the interest in the business that cannot be bought out may force the business to be sold or closed.

Another matter to consider is that if a business owner provides substantial support for his or her family assets should be available quickly.  There may be outstanding medical bills and funeral expenses.  Avoiding probate will allow the beneficiaries of the estate to receive some or all of the assets without resorting to the delays and expenses of the probate process.