A will is one of the basic documents that you will need for your estate planning. If you die without a will, New York State Intestacy laws will dictate the how your estate shall be distributed in addition to the method of making such a distribution.   This can have dramatic consequences.

A will allows you to make decisions on distributing your property following death. With a will you can:

• Name your beneficiaries, who will receive your property.
• Appoint a personal guardian to raise your minor children.
• Establish trusts, such as a child\‘s trust.
• Name an Executor.

The Executor

The Executor is the person who you decide to administer your estate and carry out the terms of the will. The Executor:

• Decides whether your estate needs to do through probate.
• Probates the will if necessary.
• For the year following death, takes care of all your property.
• Distributes all of your property.
• Pays all taxes.
• Is responsible for the accounting of the estate.

Why a Will is Important for Estate Planning

Even if you decide to distribute most of your estate through other vehicles, such establishing a living trust, it is still important to have a will. Why?

• If you acquire property shortly before death and fail to make changes to other portions of your estate plan, if you have will,  the beneficiary you choose will inherit the asset.
• Name someone to take care of your children under the age of 18.

You may need only a will if:

• You own only a small amount of  property.
• Your sole concern is to provide for your minor children.

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One of the problems that you may encounter when buying a business in New York is understanding how to structure the purchase.  Basically, there are two ways that you can buy a company:

1. Asset Purchase;
2. Stock Purchase.

In most cases, you will be better off purchasing the assets. There are three big benefits to buying the assets and not purchasing the stock:

• Tax benefits. With an asset purchase, you can give different purchase prices among the various pieces of the company.  For example, certain equipment can be deducted immediately so you may want to assign a greater price for those assets.
• You can choose not to acquire liabilities of the business you wish to buy. Perhaps the company failed to pay a supplier for goods it ordered two years ago.  The statute of limitations on a breach of contract lawsuit is six years, so you could be hit with a lawsuit four years after buying the company.
• You don’t have to buy every asset of the corporation. It could be in you best interest to buy only the profitable portions of the company.

Sometimes you are not given the choice of how a business sale could be structured.  Many business that are for sale require purchase of stock only for a variety of reasons. For example, the seller may believe that there are tax advantages for selling all the stock.  If you have to buy corporate stock, it is imperative to conduct a thorough investigation of the corporation’s books and otherfinancial dealings.  You can insert warranties and indemnification clauses in the stock purchase agreement. You may also be able to purchase insurance.

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New Yorker\‘s are a mobile bunch. Especially New York business owners. Business open and close every day.  It is risky to believe that your co-owners will still be with you five years down the line. It is likely that there will come a time when of your co-owners will want to sell his shares or interests in the company to someone else.  One of the most common ways that a small business can get disrupted is when an owner desires to sell or transfer his interests in a company. So, what should you do?  You should create in advance a method for the owners to review and block any that is not in the best interests of the company.  Here are some things you should think about:

1. Right of First Refusal. This is the most common provision in a buy-sell agreement. The owner who wishes to sell his interests first offers it to his co-owners before anyone else.
2. Decide the Price of the Ownership Interests in Advance. Often the price will be set at the price a proposed outside buyer has bid.  I do not recommend this option because a fraudulent offer is possible. Another method is to set a pre-determined price at the time a buy-sell agreement is drafted.  Another option is to set a high down payment price which would show good faith.
3. Make clear the effect of any sale on Minority Owners. Often a right of first refusal provision may freeze out a minority owner from selling his interests.  As a result, it may be important to include a \“Right to a Forced Sale\” clause.
4. Decide who can buy the interest. Should the company have the right to purchase shares or the individual owners?
5. Should an owner be able to give away his interest? Often owners wish to grant their interests in a company to a trust for estate planning reasons. This could be problematic because technically the trust would own the shares of the business. Often these issues are addressed when drafting a buy sell agreement.
6. No Transfer Restrictions. Refusing to transfer any ownership interest is another possibility. This can limited in a few different ways, such a no transfers to certain persons and no transfers without written consent of the other owners.

You should decide in advance what to do if an owner of a business wants to transfer its interests through a buy sell agreement to avoid unnecessary problems and potential litigation.

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If you are planning to sell or buy the assets of a corporation, before you go to your lawyers office you should provide the answers to the  following questions:

• Names and addresses of everyone involved in the sale
• All assets and property that will be in part of the sale
• What monies are being paid?
• What are the debts and liabilities of the company?
• Will the consideration be paid in installments or a lump sum?
• When will payment be due?
• Have all due diligence documents been obtained?  For example, have you inspected the books, property or business records?
• Agree on a closing date
• Are there any warranties?
• Any intellectual property, such as the use of the company name be transferred?
• Who pays any potential taxes?
• Are there any employee agreements?
• Are there any leases?
• What happens if one party defaults?

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