When two people go into business together, unless they do some good, detailed planning on the front end, some key issues are often not addressed. One of those is this: what happens when one of the owners dies? Does the deceased owner’s stock or ownership interest in the company get passed on to his or her spouse, or to his or her children? Or, does it get purchased by the company, for an agreed upon price or using an agreed upon formula, either in a lump sum or paid over time? This is an important issue, and it is wise to plan for what happens at an owner’s death.
The concern about having ownership interest pass to the deceased owner’s family is of course that the surviving original owner is now in business with people he or she did not choose to be in business with. And, equally as important, these other people may not have the skills, knowledge or business acumen to be a business owner, or may not want to be involved.
This is why planning among business owners is really critical. Wise business owners will put a plan in place to address this issue early on, before any issues arise, and will then evaluate their plan every few years to make sure it is still appropriate.
If the owners fail to do any planning, and then tragedy strikes, the situation becomes much more complicated, and perhaps costly, then it needs to be.
If you’re looking at starting a business in Georgia, I invite you to request The Guide To Starting a Business in Georgia. It answers four frequently asked questions we receive about the process, and also answers three questions that people should be asking when thinking about starting a business in Georgia. And, if we can be of help with your business law needs, we invite you to contact us.