Maryland Business Succession Lawyer
Running a successful business is the culmination of years of hard work and dedication. Whether this is a sole proprietorship where an owner takes a direct hand in day-to-day activities, or it is a larger corporation with a board of directors, owners prefer to maintain a controlling stake in their companies.
Unfortunately, this control can be diminished in the event of unexpected injury or death. An owner who is suddenly unable to control their business may see their company fracture, become the subject of an acquisition, or see a family member removed from the ownership group.
One way to avoid these outcomes is to form a business succession plan. While these plans are not subject to the rulings of the state’s probate court, they can serve as a means for individuals to dictate the legal steps following their potential death, incapacity, or planned retirement. A Maryland business succession lawyer could help you create a satisfactory plan that protects your company from any unexpected change in ownership.
How Might a Death or Incapacity Affect a Business?
An owner of a company has a hand in running a business, either by directly communicating with customers or having a controlling share of stock. In either case, a sudden inability to perform one’s duties can have a devastating effect on both a business’ and a family’s finances.
For family-owned companies, control over that business may fall to the jurisdiction of the Orphan’s Court. If a decedent does not have a will, or if that will is silent concerning the future ownership of a business, Maryland Code §3-101 states that the business will fall under the category of intestate property. Subsequently, a spouse and children could each receive their portion of the estate, including the business, which could result in a company split between these parties.
In the case of larger companies or corporations, sudden deaths, or incapacities can lead to a forced sale of stock, disputes over mergers or sales, or even a dissolution of a company. A lack of a business succession plan can have a devastating impact on a company. Fortunately, a local business succession lawyer could be able to prevent these issues.
Topics Business Succession Plans Could Address in Maryland
A controlling stake in a business is an asset in the eyes of the State Legislature. This means that a death can be the subject of critical arguments in Orphan’s Court. With this in mind, it can be helpful to imagine a business succession plan as similar to a will.
Common topics that succession plans can address include:
- The sale of real estate, intellectual property, or territorial rights
- The allocation of funds from insurance proceeds
- Directions for a board of directors
- Naming a successor as a sole proprietor
State laws do not dictate what form a business succession plan must take. However, it is essential that these documents are clear and demonstrate obvious intent. It is best to present these documents in writing with a notarized signature, and it may also be helpful to have impartial witnesses sign the document.
While many people may think of a business succession plan as insurance against sudden incapacity, it can also be a useful tool for planning a retirement. It can be difficult to predict the future, and owners may wish to groom a successor, to transfer the assets of the company into a trust, or to wind down the company with regard for their heirs. Having a legally binding business succession plan can help to meet these goals, and a nearby lawyer could help draft these documents.
Let a Maryland Business Succession Attorney Determine Company Control
Retaining control over a company is essential for any owner. However, situations may arise where you are unable to keep that control due to incapacity, retirement, or death. In these scenarios, a lack of clear intent on your part could lead to boardroom disputes, interfamily fighting, or even a collapse of your business legacy.
Having a detailed and clear business succession plan could be essential to the future of your company and your family. These plans can nominate successors, direct a board to fulfill your final wishes, and even force the sale of a company. Creating a solid plan may not only allow for a smooth transition but could also give your company’s heirs legal standing to demand enforcement in court. Working with a Maryland business succession lawyer could help you research and draft these documents. The sooner you act, the sooner you can protect your business and family. Call today to schedule a consultation.
