Articles Posted in Business Succession

You built your Houston business with long nights and bold choices. When you die, you want that momentum to continue without court bottlenecks or family disputes. A clear succession plan, aligned with Texas probate rules, keeps customers served, payroll met, and value preserved. With a few targeted steps, you can hand the company to the next leader without missing a beat.

Map Who Does What on Day One

You should identify who runs operations the morning after you pass. Name an acting CEO or general manager in writing, and give them authority to sign checks, approve vendor orders, and manage staff. Create a binder (digital and hard copy) that lists bank contacts, insurance policies, recurring payables, and key passwords stored through a secure manager. Clarity in those first seventy-two hours prevents panic and protects your reputation with lenders and clients.

Choose a Transfer Mechanism That Fits Your Structure

Your plan depends on how you own the company. If you hold shares in a corporation or membership units in an LLC, a buy-sell agreement can move your interest to co-owners at a pre-set price. For sole proprietors, a transfer-on-death designation on business accounts and a will that names a successor can bridge the gap. Many owners place interests into a revocable living trust so a successor trustee can act immediately without waiting for probate letters. Pick the method that matches your team, your tax goals, and your time horizon.

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A buy-sell agreement is a legal provision of an estate plan that details how the estate owner’s business will transition to different ownership when he or she dies. Buy-sell agreements are critical for business owners’ estate plans, as they help ensure that a business can continue to thrive even if the unexpected occurs. On today’s blog, we review some of the basics of the buy-sell agreement, as well as why they are so important for estate planners to consider.

What are the Elements of a Buy-Sell Agreement?

Each buy-sell agreement can look different, and the particular elements will depend in large part on the business owner’s goals. It is common, however, for a buy-sell agreement to include a list of triggering events that put the buy-sell agreement into effect. While the owner’s death will certainly qualify as a triggering event, it’s likely that the owner’s incapacitation and/or voluntary departure will also be triggering events.

The agreement will also include information about how to value the business, the specific buy-out procedures, and restrictions on who is legally able to purchase the owner’s shares of the company. These provisions should be as thorough and detailed as possible.

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If you are a business owner and want to transfer your ownership to a family member or external party, there are several options available to you. The best option, as always, will depend on your own circumstances and goals. On today’s blog, however, we review the basics of the most common options that business owners use when transferring ownership of their business. The most fundamental tip we offer to those considering transferring ownership of a business is to start looking into options early. Because the process requires so much care and attention, it’s never too soon to start thinking through the various possibilities.

Option 1: Gift the Business to a Family Member

If you have a daughter, son, or grandchild that you want to take over your family business, the first option is to transfer the business as a gift. In the United States, the gift tax exemption gives business owners the opportunity to transfer their company, in part or in whole, without charging any money. This federal exemption changes every year, so be sure to ask a wealth planning professional or estate planning attorney about this year’s annual limit.

Option 2: Sell the Business

You can, of course, sell your business in part or in full. By selling only part of the business, you can retain some ownership (and therefore some control) over the business while you take the time to pass down your institutional knowledge to the next generation. You could choose to do an internal sale, selling to a family member, or an external sale. Either way, it is important to think through your options early and do your due diligence so your business can carry on successfully.

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