You like your business partner a lot, and it’s been a productive partnership, but you never particularly considered putting your business partner in your will or involving them in your estate plans.
Maybe you should. In fact, you should probably be in theirs. At the very minimum, you and your business partner need to have a frank discussion about estate planning and take some steps to ensure that, should either of your die, the business won’t die with you.
What kinds of things should business partners consider when making a will?
Typically, a business partnership between two people ends automatically when one person dies, but that doesn’t necessarily solve the problems for the business. These are the questions you and your business partner need to address:
Would the loss of one of you cause the business financial hardships? The odds are high this is true, and those odds can increase if one of you is the “big name” or “face” of the business. It’s generally wise to have insurance policies on all the business partners (payable to the business) so that the company can weather their passing.
What happens to each partner’s share of the business when they die? If your partner’s share of the company goes to their estate, you could find yourself saddled with a new partner (whoever inherits) that you don’t want. It may be wiser to agree that the insurance policy mentioned above will be used to buy out the estate.
When you’re in business with someone, you have to plan ahead, even when it’s uncomfortable to discuss these topics. Taxes, too, might be an issue, so it’s wise to get both experienced financial and legal guidance for your business and estate plans early on.