Owning a business comes with risk. So as a business owner, it’s important to have a clearly defined succession plan and protected assets. Though many of our clients are business owners, very few have a well though-out, clearly outlined plan. It’s often hard to consider something that seems so far in the future, or even completely unlikely, but it’s never too early to be prepared and to protect your family.
One of the suggested Estate Planning tools for business owners is a Buy-Sell Agreement. This written agreement outlines that in the event of a specified occurrence such as death, disability, or termination of employment, that other owners, a specified successor, or the business itself will purchase all of that owner’s shares at a specific price. It details what will happen to the business and who will assume control.
There are three types of Buy-Sell Agreements:
- Cross Purchase Agreement— Other owners agree to buy out the exiting owner’s share at a previously specified price.
- Entity Agreement—The business or company purchases out the exiting owner’s share at a previously agreed upon price.
- Hybrid Agreement—Both remaining owners and business together purchase the shares of exiting owner.
This agreement protects the family and allows the business to maintain a certain valuation at fair market value. Sometimes funded by life insurance, a Buy-Sell Agreement allows a business owner or owners to have a clearly defined plan in the case of an unexpected event.
Aside from the unknowns that come with succession of a business, there are many other risks that come with business ownership, including facing legal claims. It’s important to pinpoint the risks your business might face, and then make a plan to protect those assets.
Estate Planning in Boca Raton, FL
Integrating Asset Protection and Succession Planning with your personal Estate Planning is possible with the help of an Estate Planning Lawyer like Barry Siegel. With almost 20 years of experience in the field, he can help you pinpoint your needs and be prepared to protect your assets, your business, and your family. Contact us today to schedule your no-cost consultation with the Siegel Law Group, P.A.