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A successful company must be able to navigate unexpected challenges and changes. However, the passing of a business owner or partner is one of the most disruptive events a company can face.

Without a concrete plan in place, the death of an owner or partner can have a catastrophic impact on a business. The resulting legal, financial, and operational issues can quickly lead to declining sales, litigation, or even the collapse of the company.

Fortunately, through estate planning, you can put formidable strategies in place to ensure the survival of your business and financial legacy. These include:

Buy-Sell Agreements

Many businesses have multiple founding partners. In such entities, the co-owners may choose to include a buy-sell agreement in their estate plans. A buy-sell agreement outlines a plan for the remaining partners to buy out a portion of the business if a co-owner dies. The beneficiaries of the deceased’s estate receive payment for the sold share of the business. The arrangement generally supports the stability of the business as it does not involve negotiating with new owners.

Life insurance policies are a popular strategy for funding buy-sell agreements. A business entity or its partners may choose to establish life insurance policies for each owner, which would be used to fund a buyout should one partner pass away. This ensures that the business isn’t destabilized by massive spending to honor the buy-sell agreement.

Tax Planning

Without proper tax planning, your tax obligations may impact your business and beneficiaries after your death. As of 2021, the IRS requires an estate tax return for any estate valued over $11.7 million. This tax liability falls to the beneficiaries of the estate. Unexpected estate tax obligations can be detrimental to the survival of a deceased owner’s business, as the company may be forced to sell assets to pay the IRS. This can easily disrupt the business’ everyday operations while threatening its long-term growth.

Fortunately, through tax planning, you can help lessen your business’ tax burden. If the business is family-owned, the establishing a Family Limited Partnership is a potential strategy to reduce tax liability.


Your estate plan should specify who will own and manage your business after you pass. If you are a sole proprietor and plan to leave your business to a specific person, it is important to select and prepare your successor well in advance. To avoid a challenging leadership transition, ensure that the successor is known to your clients and team members. Help them prepare to lead your company by familiarizing them with your book of accounts, company values, and long-term strategy.

A detailed succession plan should give your successor the tools and support to continue your financial legacy. By including succession planning in your estate plan, you help prevent disagreements and potential litigation over who should take over your business.


Proper estate planning is essential if you want your business to last for generations. Importantly, ensure you consult an experienced estate planning lawyer to help you develop tailor-made solutions that will fit your circumstances.