Do you own a business? Do you own shares in a corporation? There are a number of important estate planning considerations which arise for you if you have a business that is incorporated or hold shares in a company, specifically legal, tax and financial considerations.
In some cases, a shareholders’ agreement for the company in which you hold shares may exist. This will impact the transfer of your shares on death, and may affect who you intend to leave your shares to. The shareholders’ agreement and the articles of the company in which you hold shares should be reviewed carefully in the course of your estate planning, and should be seen by your lawyer and your accountant so that they can come up with the best possible estate plan for you.
Also important to think about will be the day-to-day operation of the business when you pass away—who will take that over? Do you have a succession plan in place?
There are a number of ways of arranging the transfer of shares to meet your wishes. In some cases, you may have a child or other family member who will be taking over the business. In others, you will want the company to be sold and the proceeds from the sale to be available for distribution to the beneficiaries.
Specific matters that need to be considered are:
1. Who the voting shares in the company will be transferred to (as they will be entitled to vote on the composition of the board of directors to run the company) and
2. When you want your chosen successor (if there is one) to receive the shares in the company.
Estate planning around your company is very important. Talk to your lawyer and your accountant about your business interest and what you would like to happen to it upon your death. Transferring your interest through your will is just one method that can be used. Other options can also be used to accomplish your wishes, such as trusts.