Legal Question in Business Law in Texas
Company Succession
My business is a corporation, I am 51% owner and my wife is 49% owner. I have one employee, my son, who handles all the contracts and paperwork of the business. I do not have any business succession plan except I have name my son as the successor to the business in my will. Someone suggested that we consider a stock redemption plan instead of the will. Is a solution changing the corporation bylaws to reflect my wishes? What would be the best way to pass my company on to my son?
2 Answers from Attorneys
Re: Company Succession
The best way really depends on your personal circumstances, the value of the business, and whether or not your wife is active in the business or needs an income stream from it after your death.
Whether an outright bequest of your interest in the business in your will, or a cross purchase or a redemption agreement or some other mechanism is dependent on all of the foregoing.
Re: Company Succession
A will is one way. Issuing new shares and diluting you and your wife's holdings is another.
You can't do what you want simply by changing the bylaws.
You should meet with a lawyer to discuss all the factors that will determine the best course of action. See Mr. Geffen's answer, as well, as to some of the factors that will influence the final decision.
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