So very often professionals spend much of their waking hours working on or in their practice. One works tirelessly to build a successful practice and a plan should be in place regarding what would happen if the founder were to become disabled or pass away. One’s business succession plan and estate plan should work hand in hand to ensure that there is a smooth transition from leadership to leadership. Too often these details go unaddressed and the business can be lost upon the passing of the founding partner.
Some professional businesses require a licensed professional to retain decision making authority in the company. Consequently, the beneficial interest to income from a deceased owner’s interest in the company would be passed to his or her then living next of kin according to the intestate laws of North Carolina. Unfortunately, if there is no professional to take the place of a deceased owner, the business may have to shut down.
Another unfortunate situation may arise if there is more than one business owner. If there is no buy-sell agreement in place and no estate plan addressing how the ownership of a business should pass, a deceased owner’s spouse may have a beneficial ownership interest in a company without any decision making authority. As such, ensuring that the terms of what will happen upon the disability or death of an owner of the company is key to not only contribute to the continued success of the business but also to ensure that an owner’s family can effectively receive compensation for the value of the company upon an owner’s passing.
A professional’s life is not compartmentalized into strictly work and personal goals. Accordingly, one’s business and estate planning should not be in a void but instead should work hand in hand to ensure one’s goals are achieved effectively.