A Will is a very important document. However, it can often be clouded by emotion and can seem overwhelming. Hence, it is important to understand the basics of forming a Will. This includes whether you can leave your business to someone. Read this article to find out.
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What is a Will?
A Will is a legal document which establishes how your assets including property and money will be dealt with after you pass away. A Will sets out how any specific assets your beneficiaries will receive. A beneficiary is an individual who receives the deceased’s assets. This is normally in the form of money or property, following the administration of a Will. Furthermore, the Will decides who the executor will be as well as any further instructions you may have. An executor locates the Will, pays off any debts as well as establishes and manages any long term trusts.
Leaving a Business in a Will
A Will provides instructions in regards to how you want your assets including your business to be distributed and managed upon your death. Like any type of asset or property, a business owner can transfer their business through their Will. The business will then be able to be distributed to the selected person or people upon the owner’s death.
In short you definitely can leave your business to someone in your Will. Moreover, we recommend that you take this action. If the owner fails to make note of any instructions for their business, it is likely that the business will be subject to the respective state laws. This means family must go through extra court time and lawyer fees at an already emotional time.
Additionally, if the business is left to state laws, its distribution may end in an unfavourable outcome. This will also have an affect on the operations of the business and its employees if the distribution process is lengthy. However, you can avoid all of this if you clearly state in your Will your wishes for your business, including who you will leave it to.
Disadvantages
There are some disadvantages to consider when leaving your business to someone in your Will. The main drawback when transferring your business through your Will is estate tax. Estate taxes are the taxes owed and paid by your estate when you die. These taxes are imposed on individuals by the federal government. If the business being transferred is large enough, then it can result in heavy taxes levied upon the person receiving the business. Therefore, it is common for family members to sell their inherited business so they are able to pay the estate taxes owed on the transfer of the business.
Another disadvantage can be regarding succession. Often, a Will does no clearly state which individuals are to receive the business and operate it. This can cause unnecessary confusion. However, you can avoid this by having detailed instructions for your business in your Will.
In conclusion, you can leave your business to someone in your Will. If you have any other questions ask an estate lawyer today.
