The choice of business entity in the context of estate planning and asset protection turns largely on the type and value of the asset to be held by the entity and the relationship of the owner with the intended recipient. In other words, the goal may be to make lifetime gifts of fractional interests to children as an element of a gift tax strategy, or it may be to arrange for a smooth transition of the family business upon the incapacity or death of the owner.
FORMATION OF BUSINESS ENTITIES
REGISTERED AGENT SERVICES
When attorneys serve as Registered Agent, they often provide additional services, including the preparation of minutes of annual meetings of shareholders and directors. It is also common practice to maintain custody of the original corporate minute book, with the records of meetings, elections of officers, stock certificates and the corporate seal, providing confidentiality for company affairs.
BUSINESS SUCCESSION
Where the business is co-owned with others who are not family members, the estate planning goal shifts to the preservation of the value of one’s interest upon death. A common technique is an agreement among the owners as to the terms governing the purchase of the deceased owner’s shares by the survivors. Also known as the “buy-sell” agreement, these contracts provide for predictable terms, a formula for future pricing of interests (some using life insurance for purchase funds), and limitations on the transfer of interests to unwanted partners. Skillfully drafted buy-sell agreements can ensure a smooth transition of the decedent’s ownership interest and avoid many of the pitfalls leading families into litigation with the remaining owners.