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Reducing the risk of probate litigation over business matters

For many Pennsylvania business owners, addressing the issue of how to pass on their business to the intended heirs is a top priority. There are a number of options for transferring business interests, all of which share the risk of probate litigation. Finding a solution that minimizes that risk is essential to preserving wealth for one's heirs. As with so many estate planning matters, having a clearly outlined plan in place is the best way to begin.

No matter if a business is family owned, closely-held or publicly-held, there is a potential for legal wrangling over the distribution of assets. One way to address this risk is to create a clear buy-sell agreement. This agreement outlines the value of a business and determines a plan for distributing assets to the proper parties. This approach gives business owners a great deal of control over how their business will be handed down to loved ones.

Another approach involves the use of escrow accounts to handle the transfer of stocks. When the owner passes away, the stock is placed into escrow and held there until the shareholders are able to fulfill the terms of an agreed-upon plan. Once that hurdle has been crossed, the stock is released from escrow and transferred to the appropriate parties.

Both of these options offer a Pennsylvania business owner a high degree of control over how his or her hard-earned business interests are handed down to any desired heirs. As with any other aspect of estate planning, these tools are most effective when one's heirs are made aware of the plan. Putting everything out on the table can help minimize the risk of probate litigation and help ensure that wealth is passed down as intended.

Source: Forbes, "Don't Be So Emotional: Drama-Free Business Estate Planning", Steve Parrish, Nov. 9, 2015

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Larmore Scarlett LLP

Larmore Scarlett, LLP
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