Probate law is known for its complexities. Yet, the legalities of asset ownership become even more challenging if you own a business when you pass away. Without the correct documentation in place, it could leave your heirs and any partners or employees in a state of limbo. Here's a closer look at what you need to know about the estate planning process.

4 FAQ About Estate Planning if You Own a Small Business

1. What happens to a business when an owner dies?

After a person dies, their assets are sent to probate to be distributed correctly. This includes any shares in businesses. If there's not a will in place, probate law requires the court to determine the beneficiaries. The process becomes drawn out and can easily take a year or more to complete. 

During this time, business income, as well as operations, can be halted. As a result, your dependents may face financial struggles, and the company may fail. Fortunately, creating a will provides the probate court with the direction of your wishes, which usually results in a quicker and smoother process. 

2. What business elements should be included in a will?

It's vital that your will outlines your intentions for the business. The document needs to highlight how the assets are to be transferred as well as any property. Beneficiaries also need to be named.

Additionally, it's helpful to create a full list of business-related accounts, including customers, banking, and invoices. These details are essential to daily business operations and are distributed to the proper parties by your attorney or executor.

3. What's a succession plan? 

The goal of a succession plan is to make it easy to move forward for your heirs. The document accompanies a will and details the day-to-day roles of the beneficiaries. You can also include information regarding strategy and marketing. Alternatively, you can use the plan to order the sale of the company. 

4. What's a buy-share agreement?

When multiple owners are involved, a buy-share agreement is the only way to control what happens to your share of the business. The document can dictate what portion of the share is saleable as well as the price required. You can even go as far as outlining who's allowed to buy it. 

If you own a small business, delve further into the estate planning process with the assistance of Morrow, Gordon & Byrd, LTD. Based in Newark, OH, the local law firm offers Licking County residents and businesses guidance in a variety of practice areas, including estate and probate law. Get to know the lawyers and their experience online, and book a consultation today at (740) 345-9611.