The Law Offices of Kennedy & Jackson Houston, Texas 713-783-7444 |Email
If you own an interest in a closely held business, especially a family business, it is critically important to get knowledgeable legal and financial advice regardingbusiness succession strategies— if you want the business to continue after the deaths of the current partners.
A buy-sell agreement should be part of any estate plan for a family that owns one or more businesses. Creating a buy-sell agreement for ownership interests in a family business provides protection — for the business owners and the business itself — in the event of major life changes such as divorce, incapacity or death.
FAMILY BUSINESSES AND ESTATE TAXES
One problem with owning a closely held business is that — after the death of one of the partners —estate taxesmay be difficult to calculate because it can be difficult to estimate the value of a closely held business with limited value on the open market.
Drafting a buy-sell agreement helps fix the value of the business for estate tax planning purposes, so that your surviving family members are not overtaxed after your death. The buy-sell agreement also provides a market for your family members to sell their inherited ownership interest in the business after your death.
AN EXAMPLE OF A BUY-SELL AGREEMENT
Will White and Barbara Brown are partners in a closely held business, each doing half the work and receiving half the profits. Will White dies, and his 50 percent interest in the business passes to his wife, Wanda White, who has never been involved in the business. Now, Barbara Brown is doing all the work but receiving only half the profits, because half the profits are going to her original partner’s wife, Wanda White.
Wanda White wants to sell her business interest but there is no ready market. Using a buy-sell agreement, Barbara Brown can agree ahead of time to buy Will White’s interest in the business upon his death, divorce or incapacity. With a buy-sell agreement in place, usually supported by a life insurance policy on each partner, the remaining owners can buy out the inherited owners and continue operating the business.
BUSINESS SUCCESSION ADVICE FROM KNOWLEDGEABLE ATTORNEYS
For decades,The Law Offices of Kennedy & Jacksonhas focused its legal practice exclusively on matters relating to estate planning, asset protection and probate administration.Our attorneys— each of whom is board-certified in estate planning andprobate lawby the Texas Board of Legal Specialization — represent businesses, individuals and families throughout Houston and the surrounding counties.
CONTACT THE LAW OFFICES OF KENNEDY & JACKSON
Our law office is located in the Galleria area of Southwest Houston, with free on-site parking available next to our office building. We provide a complimentary — and confidential — initial consultation to all new potential clients.
To schedule an appointment with one of our lawyers, call 713-783-7444 or send us an email.
The Law Offices of Kennedy & Jackson 5851 San Felipe Street Suite 925 Houston, TX77057 Phone: 713-783-7444 Toll Free: 800-483-0576 Houston Law Office Map