Planning to sell a business or pass it to heirs

Maryland business owners may not think they need to consider what they will do when they are ready to retire or leave their company because it is far in the future, but all business owners need to have an exit plan in mind. Failing to plan can mean scrambling at the last minute to sell the company and only being able to do so for less than it is worth. For business owners who hope to leave their company to a family member, it is advisable to put documentation in place to smooth the transition.

A living trust can be an excellent way to protect the assets of a small business for heirs. Property, copyrights and patents can all be placed in a living trust, and if the company operates in more than one state, a living trust means heirs will not have to go through probate in those states. However, owners should keep in mind that some types of businesses may be more difficult to place in this type of trust. For example, a majority of its owners must agree to put an LLC into a living trust.

Individuals who hope to sell their companies should keep long-term plans in mind. It is important to keep building the value of the business and to sell at the right time.

Business owners may wish to discuss these plans with an attorney whether they are just forming the company or have been running it for many years. In addition to the importance of making the transition smooth by planning ahead, the unexpected can happen even if the business owner plans to keep running the company for years to come. For example, having a plan in place will be important if the business owner dies or becomes incapacitated.

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