How to Coordinate Business Succession & Estate Planning

October 30, 2024  |  Carole Clark Isakson

At some point, many business owners execute a will or trust to provide for the disposition of their personal assets. Those dispositions will either specifically or generally deal with their business ownership interests as well. However, business succession planning is also affected by an entity’s governing documents. This blog addresses the possible conflicts between the entity documents and the individual owner’s estate planning documents. Make sure your business attorney and estate planning attorney are each aware of your plans so you can avoid such conflicts. Governing Documents Affect Business Succession Planning When a business owner makes an estate plan, they must decide where all their assets are to go, including ownership in the business. The owner—let’s call her Sam—may wish to leave half of XYZ Properties to her three children for their benefit. So, Sam’s will or trust will state that her ownership interests in the company (or perhaps simply all her assets) are to be divided equally among her three children. Whether or not this will actually happen depends on the governing documents of XYZ Properties. There are several forms of business entities. But no matter the type of business, the owner(s) intentionally created it, and in cases where there is more than one owner, the owner intentionally chose the other person(s) with whom…

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