When it comes to planning for the premature death or total disability of a business owner, it’s important to consider not only the disposition of ownership, but also the resolution of any personal guarantees, and the retention of key staff that will be relied upon to step up.
If a business owner dies and their stock goes to the wrong person, or if the terms of the stock transfer are not feasible for the new owner, it can create significant problems for the business and its stakeholders. This can include issues with decision-making, management, and ownership structure, and can ultimately result in legal disputes and financial losses.
The death of a business owner can have significant implications for the estate and for any personal guarantees that the owner may have made on behalf of the business. In the case of lines of credit, equipment loans, leases, or indemnification bonds, the estate may be held responsible for any outstanding balances or obligations that were guaranteed by the owner.