Writing a will is a good idea for anyone, but its especially important if you own your own business. Here's why.
You know that in a will, you state your wishes about who you want to inherit your property, divvying it up however you choose. Those wishes are legally binding. (Though in most states, a spouse who's unhappy about his or her share can go to court and claim a certain share, commonly about one-third of the estate. That rarely happens.) If you don't leave a will with directions about who you want to own the business, state law does it for you--close family members will receive everything. The rules vary from state to state, but generally surviving spouses and children share the estate. If you're not married and don't have offspring, assets will go to your parents or siblings.
That means your company could well end up in the hands of your spouse and children—even if your children are teenagers, or they're from a prior marriage and don't get along with your spouse, or your family doesn't have any idea what to do with the business. Far better to make a thoughtful choice about who should inherit, and in what shares. You especially don't want an interest in a valuable business passing to young children without a mechanism in place for an adult to manage it.
But a will does much more than leave property. It also lets you:
Name an executor. Writing a will gives you the chance to name someone to serve as executor, to carry out the terms of your will. That person will be in charge of gathering your assets, paying debts, filing tax returns, and eventually distributing your property in the way you directed. That can be a big job, particularly if you leave a business behind. In your will, you can pick someone you trust to make smart decisions about your business assets and to follow your wishes about keeping the business running during a transition time or closing it down in the most advantageous way. If you don't write a will, the court will appoint someone to fill the executors role, usually the surviving spouse or an adult child. But this isn't a choice you want to leave to a stranger who doesn't know you, your family, or your business.
Choose someone to manage children's property. You might well want to leave valuable assets directly to minor children or young adults, especially if you're not married to their other parent. But children need someone to manage assets for them until they're old enough to do it themselves. A will lets you set something up, just in case its necessary. You can create a trust that will come into being if the kids inherit before they're adults, or appoint a custodian under a law called the Uniform Transfers to Minors Act (UTMA).
Nolo's Quicken WillMaker allows you to make your will quickly and easily. Just answer questions about yourself and your property, and print. Your document prints out with instructions about notarization and witness signatures.
Although a will is a great start for anyone who's decided it's time to do some estate planning, you might consider making a living trust as well. A simple trust is not any harder to create than a will (though there's a little more paperwork), and it lets your family avoid lengthy and expensive probate court proceedings after your death. Assets in a trust can be transferred quickly to the people who inherit them—a big advantage if you want a business to keep running smoothly.
You can also use Nolo's Quicken WillMaker to create a living trust with high ease and low cost. Just answer questions about yourself and your property, and print. WillMaker provides legal and practical information to help you decide the best way to set up your trust.
If you co-own a business with others, such as a partnership, LLC, or corporation, you will want to sign a buy-sell agreement, or buyout agreement, with your co-owners, that will control what happens to your ownership interest when you die. Some owners agree that the business should have the opportunity to buy the business your share of the business back from whoever inherits it. A buyout agreement can even call for the company to purchase life insurance on the owners so that it can be used to fund the purchase of a deceased owners interest, turning the buyout agreement into a business continuation plan. Other business owners want to keep the business in the family, and in that case the buyout agreement can be turned into a succession plan. For more information, see Business Buyout Agreements: A Step-by-Step Guide for Co-Owners, by Bethany K. Laurence and Anthony Mancuso (Nolo).