One of the many reasons why it is a good idea to engage the services of an estate planning attorney when you become serious about planning your estate is because every case is different. You will see websites out there claiming that estate planning is as easy as filling in the blanks on a generic template document, but the reality is that no one document is ideal for every jurisdiction. And in addition to this, there are many different vehicles of asset transfer that can be utilized, and the correct vehicle or combination of vehicles is going to vary on a case-by-case basis.
Estate planning attorneys recognize this and they listen closely as you explain the particulars of your situation and devise a plan that is created based on your intentions and the specific nature of your assets. One of the situations that arise that is not typical is that of succession planning for small business partners. If you are a partner in a small business and you were to pass away your family may sell this share to the highest bidder. This could leave your remaining partner or partners in an uncomfortable situation. At the same time, if one of your partners was to die first, you would be the party who was left at the mercy of the decisions made by the family of your deceased partner.
These situations are often reconciled by the creation of buy-sell agreements. The two most commonly utilized types of buy sell agreements are the cross purchase plan and the entity plan. With the cross purchase plan each co-owner purchases an insurance policy on every other, and when one of them dies the combined proceeds are used to buy that share from the family of the deceased. With the entity plan, the business as an entity takes out an insurance policy on all the co-owners. When one of them passes away, the insurance company benefits are used to buy the deceased’s share from his or her estate.
To learn more about buy-sell agreements, contact an estate planning attorney who has a comprehensive understanding of small business succession strategies.