Legal Question in Business Law in California

Re: Transfer of Businesss to my Kids

You should ask for free initial consultations with one or more local lawyers who advertise that they handle small business matters, or possibly estate planning. This is not something you should try to do yourself, and unless there are complicating factors I don't know about, the fees should not be high in relation to the value of the business and the costs of making a mistake.

The first thing your lawyer should do is figure out whether you are incorporated, and if so whether the corporation is still in good standing. It's rather surprising that you don't know, and you need to find out right away. Who handles your business affairs, books, taxes, payroll, etc.? They may be able to assist.

Next question is whether the business owns any real estate, or do you lease? If real estate is involved, or even a long term lease, there are certain documents that need to be prepared, signed and filed. Lenders and landlords, if any, will have to sign off on the proposed transfer.

If you are in California, both you and your wife will almost certainly have a community property interest in the business, regardless of whose name it is in. Your interests likely are 50-50, but different percentages sometimes arise due to the source of the money used to start the business or who works in it the most. This may not be an issue, but you should know. By the way, you say "my" kids -- do you mean "our" kids, or is your present wife not their mother? This may affect how you do this proposed transfer.

Finally, there are income tax aspects to such a transfer. You might save yourself and the kids a pile of taxes and other expenses if you set up the transfer right. An attorney who knows about estate planning can put you on the right path.

Good luck.