Most business owners or co-owners have specific ideas and goals regarding the transfer of their business ownership interests when they pass away.

However, there are numerous legal challenges and roadblocks to passing on your business interests. Passing on your business interests requires careful and intentional planning.

How to protect your business interests and transfer them efficiently

If you are a business owner, there are three things you can do to protect your business interests and pass them on effectively:

1. Buy-sell agreements: Buy-sell agreements are a bit of a two-edged sword. On the one hand, if you want to have the other co-owners of your business to take over your share, then a buy-sell is a perfect instrument. However, if you want a child, spouse or other family member to take over your share of the business, you should avoid a buy-sell agreement with the other co-owners.
2. Business succession plan: A business succession plan should delineate clearly the transfer of ownership and management. It should also provide for other factors like training of managers and delegation of responsibility, but at minimum the general succession should be clearly laid out.
3. Avoid tax problems: Whether you are transferring your ownership through a buy-sell agreement with the other co-owners or you're planning to transfer your share to a family member as part of your estate plan, there will be roadblocks and potential pitfalls if your business and tax planning strategy isn't well-crafted.

These are just a few of the important considerations involved with transferring your business ownership interests.

Do not handle these issues alone

Whatever your specific goals for the transfer of your business interests, there will be pitfalls that you don't see: Hidden tax problems or issues with the legality of the transferring instruments. The result of this could be disastrous for your overall estate plan.

Far too many business owners trust in their own knowledge and intelligence to handle business succession planning and estate planning alone, but this is a mistake. The most important thing you can do is work with an experienced business succession planning and estate planning lawyer to get a set of expert eyes on your transfer strategies.