Estate Planning for the Professional

Charleston Estate Planning for the ProfessionalWhile there are many shared considerations in estate planning for the professional and planning for the non-professional, one unique advantage in estate planning for the professional is the added interest in the preservation of a business or practice. This business may come in many different forms from a non-profit organization to a large corporation or a limited liability company to joint-partnership or sole proprietorship.

If the business has multiple shareholders or partners, then a buy-sell agreement should be discussed to include the interests of all involved parties. The buy-sell agreement can help assess the value of businesses interest or particular asset for the estate. A buy-sell agreement can accomplish this goal in two distinct ways: a cross-purchase or an entity purchase. While a cross purchase outlines that the surviving owners should purchase the interest, an entity purchase would allow for the business as a collective organization to redeem the interest.

If the professional is a member of a joint-partnership and one partners survives past the lifetime of the other, there are two methods to consider for planning a buyout of the other partner’s interest: a sale to surviving partners or a liquidation of interest. The former functions much like a cross-purchase where the remaining partner will purchase the shares of the other partner. Meanwhile a liquidation of interest would function as an entity-purchase or redemption.

With no surviving partners or shareholders, single owner businesses often present the greatest problems. It can be difficult to dispose of the business interest upon death in a swift manner, because the sole owner is often instrumental, if not absolutely vital, to the continued operations and management of the business. Oftentimes, it may be best for a buyer to select a buyer prior to the owner’s death and perhaps settle a buy-sell agreement. A revocable living trust can often facilitate this process and preserve the ongoing success of the business while preparing for the future buy-sell agreement.