If you are an owner of a business, you have additional considerations when it comes to writing your estate plan. One of these can include the plans for what happens to your business after you choose to exit it, whether voluntarily or involuntarily. This can include a buy/sell agreement. A buy/sell agreement often comes up as part of your individual estate planning when you own a company, too.
Each of these agreements will be unique and is designed to accomplish your specific goals. If you own the business by yourself, you can use a buy/sell agreement to carry out your wishes after you pass away, such as putting limitations and restrictions on the transfer of real estate or a future sale.
Normally, any party who you intend to leave the business to will sign this agreement. This typically allows that if children are named as the primary individuals to take it over, each of those children will be allowed to sell or transfer their interests over the course of their lifetime.
Usually one such stipulation, however, is that this can only be passed on to another person named in the agreement, such as other children or grandchildren. An important component of your buy/sell agreement for estate planning purposes is to create a formula for determining the sales price. If you want to keep the real estate associated with the business in your family, verify that you have a will and living trust in place. The agreement can also incorporate concerns about allowing your loved ones to own the property as separate property to protect this from being classified as the community property of a spouse.
Need help drafting your document and considering all the potential pitfalls of an unplanned business transfer? Talk to our Pasadena estate lawyers today.