Probate can play an integral role in the transfer of assets, including in situations involving a business owner’s passing. Not only can probate costs significantly deplete assets and eat into the value of the business, but this legal process can be extremely operationally disruptive.
A comprehensive business succession plan can ensure your company’s assets remain intact during the transition or even bypass probate altogether. A skilled attorney who is well-versed in probate and business succession in Virginia Beach can identify potential challenges while doing everything possible to ensure a smooth transition of ownership in the future.
Top Considerations When Establishing a Business Succession Plan
When you pass away, everything you have built and worked so hard for could fall apart without the right business succession plan in place. You can act now to position your business for long-term success.
A Virginia attorney can help you address all key aspects that should be included in your business succession plan while enacting measures to reduce or avoid probate. Depending on the type of business entity you have in place, operating agreements, buy-sell agreements, trusts, and your last will and testament could all be integral to your business succession plan.
For example, if you operate your business as a sole proprietor, you can arrange to pass the business down to your chosen successor upon your death or incapacitation. On the other hand, if you share ownership interests in the business with one or multiple other parties, legal tools like operating agreements and retention planning can ensure your shares are transferred to your chosen successor.
In some cases, it may be advisable to transfer the business into a Trust with the individual you want to succeed you named as your successor trustee. A business succession plan should do more than detail who will receive your business in the future.
It should include provisions for delegating duties to successors, training successors, and delineating who will be responsible for ownership vs. day-to-day management of the business. Your business succession plan should also clearly outline what will happen to business assets upon your death.
How Probate Can Impact Business Succession
Probate is the legal process through which a person’s estate is administered and their assets are distributed upon their death. Depending on how your business is structured and the way ownership interests are set up, your business could be forced to go through probate when you die.
However, a well-constructed succession plan can often overcome the need for business interests to pass through probate in Virginia Beach. For example, Trusts are generally not subject to probate proceedings, and business assets transferred to a Trust can avoid probate. Businesses placed in Trusts may also reduce or eliminate certain forms of tax liability while protecting business assets from creditors.
Without a solid business succession plan in place, assets and ownership may both pass through probate. Heirs could be left facing unnecessary taxes and expenses, and the business itself could be vulnerable to operational difficulties as these legal proceedings can drag on for months or even years.
Speak with a Virginia Beach Attorney About Probate and Business Succession
When it comes to probate and business succession in Virginia Beach, these processes can lead to time-consuming legal disputes. If you do not formalize a well-strategized business succession plan, the future of your business could be left to the discretion of a probate court and significantly impede the succession process.
A dedicated attorney can help you utilize the proper estate planning tools to mitigate any legal challenges that can arise during the succession process while reducing costs and financial stress. An attorney can help you navigate these complex legal questions while ensuring the right documents and legal structures are in place to fortify your business succession plan. Contact Parks Zeigler today to receive your free and confidential legal consultation.
