Estate Planning Considerations for Utah Business Owners
Estate planning is critical for all adults who own property in their name alone. For business owners in Utah, estate planning is even more important. Only with a solid estate plan can business owners ensure their business continues to operate after they pass away or become incapacitated, reduce tax burdens, and protect their family legacy.
There are many steps business owners can take to draft a comprehensive estate plan. These include creating strong operating agreements and buy-sell agreements, establishing trusts to smoothly transfer business interests, transferring business interests into your trust, and ensuring digital asset authorizations are updated to prevent disruptions to business operations. Below, our Utah estate planning attorney explains these in greater detail.
Operating Agreements and Buy-Sell Agreements for Business Succession
An operating agreement governs the management of your business and can also set forth your succession plan. A buy-sell agreement that is properly drafted can prevent ownership disputes by outlining who can legally purchase your interest in the business, the price they can purchase it at, and the circumstances surrounding the sale. For example, a buy-sell agreement can stipulate that your share of the business can only be sold upon your disability, retirement, or death. Buy-sell provisions can be incorporated into your operating agreement as well.
Establishing a Trust and Transferring Business Interests Into the Trust
Establishing a trust has many benefits for business owners. By placing your business into a revocable living trust, you can protect it from the lengthy and expensive probate process in the event that you pass away. Many people want to help their loved ones avoid probate, but it is especially important for business owners, as anything that happens during probate becomes part of public record, meaning the company’s confidential information could become known.
When you establish a trust and transfer your business interests into the trust, you also name a successor trustee who will manage the business within the trust according to the terms of the document. This can ensure that if you become incapacitated, the successor trustee will ensure your business continues to operate.
Establish a Durable Power of Attorney
By establishing a durable power of attorney, you give a trusted individual the authority to make certain decisions for you on your behalf if you become incapacitated or unable to make decisions for yourself while you’re still alive. As with a successor trustee, this can ensure that business decisions are still made and operations continue even if you become incapacitated.
Access to Digital Assets
In 2024, Utah enacted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). You must give specific authorization to your fiduciaries, such as your power of attorney, executor, or trustee, within your legal documents so they can access important business accounts, operational software, and domains, as the terms of service on different platforms often prohibit unauthorized access.
Our Estate Planning Attorney in Utah Can Advise on the Next Steps
If you are a business owner, it is essential that you draft a comprehensive estate plan that protects you, your loved ones, and your business. At AGS Law, our Utah estate planning attorney can advise on the steps to take and the documents that will provide the protection you need. Call us today at 801-477-6144 or fill out our online form to request a consultation with our seasoned attorney and to learn more about how we can help with your case.
Source:
le.utah.gov/xcode/Title75/Chapter7/C75-7-P6_1800010118000101.pdf
