Business Succession Planning In Nevada – The Essentials

If you are a business owner in Nevada, you may have questions about what will happen to your business after you die, especially if you have a partnership or want to pass on profits to your family. In this article, we explore business succession planning in Nevada, namely:

• Placing businesses in a trust,
• The rights your spouse has to your business when you die, and
• How you may dissolve your business after your death.

What Will Happen To My Partnership In Nevada After I Die?

What happens to your partnership when you die depends on the phrasing of your legal documents and business succession planning in Nevada. For example, your agreements may specify that your partners have the right to purchase your share or that your ownership interest will be transferred to your heirs.

On top of this, the type of business entity you have established will affect how the transfer of ownership is handled. For example, in a corporation, you can often pass the stock to your children with relative ease. However, since your business is structured as a partnership, it is not that simple. Your spouse or children may inherit your partnership interest, but your partners may be obligated to buy out your share.

Alternatively, your partners may find themselves partnered with individuals who are ineligible to be partners based on the business’s requirements, such as in a medical practice. Simply put, if your spouse and children are not licensed medical professionals, they would not be eligible to be partners in the business. This situation can lead to a critical juncture where the remaining partners must purchase the deceased partner’s interest, but they may not have enough liquid assets to do so, creating a potential crisis.

What Rights Does My Spouse Have To My Business?

Nevada is a community property state. Any assets you obtain during the marriage are shared equally with your spouse, including the increase in value of a business you start after being married. This means your spouse is, in essence, a silent partner in the business. Your surviving partners may need to buy out your spouse to maintain the business’s compliance and avoid tax-related issues. Depending on the business’s structure and your business succession planning in Nevada, your spouse may also be entitled to be a partner, which your remaining partners will most likely not welcome.

Is It Possible To Create Estate Planning Documents That Allow For The Dissolution Of My Business And The Transfer Of Profits To My Family After My Death?

It is possible to set up estate planning documents to dissolve a business and pass on the profits to family members after death. However, this strategy is uncommon because most people prefer to sell their business to a third party as a going concern, as it is typically worth more than its liquidation value.

Can I Place My Business In A Trust In Nevada?

Generally, you can place your business in a trust, although the type of business may have some restrictions. In fact, doing so is extremely common. A typical asset protection technique is placing the business in a self-settled spendthrift trust, a trust used for estate planning and probate avoidance. This enables the business to be transferred cleanly at the owner’s death without undergoing probate.

For more information on Business Succession Planning In Nevada, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (702) 703-1540 today.