Many business owners, just like most people, don't really like to think of what would happen if they were to pass away unexpectedly or become incapacitated. What would happen to their business?
Your business interest is a personal asset, so unless you provide for it in some other way, it's going to end up in your estate and have to go through probate. The way to avoid this is with a contract between the business owners. This contacts is known as an operating agreement or shareholders agreement — you can still have one even if you are the sole owner of your business. This agreement dictates the rights and obligations of the owners of the business vis-à-vis the company. It can also state what happens if one of the owners becomes incapacitated or passes away, or even becomes bankrupt or leaves the country.
If you don't already have an operating agreement or a shareholder agreement, you should think about getting one drafted and signed. If you would like to talk to me about making one of these agreements, I can certainly help you with that.
KATHERINE L. TAYLOR, ATTORNEY AND CPA
5850 Waterloo Rd