What Business Owners in Illinois Must Fix in Their Estate Plan Before They Sell

If you’re a business owner in Illinois preparing for a sale, here’s a question most people don’t think to ask:

“Is my estate plan ready for this transaction?”

And the honest answer is usually: not yet.

Selling a company — especially a family-owned business — isn’t just a financial transaction. It’s a major estate planning event. If your estate plan isn’t aligned with the sale, you could unintentionally create tax problems, delay closing, or leave your family stuck in probate trying to untangle ownership issues.

Below is a straightforward guide to what every Illinois business owner should have in place before they sell.

Why Your Estate Plan Matters Before a Sale

Your business is often your biggest asset. Once that asset converts into cash, notes, or ownership interests in a buyer’s company, your estate plan needs to reflect:

• who ultimately receives the value,

• how it’s protected,

• and how to minimize taxes when the ownership structure changes.

A clean estate plan protects your family, gives your buyer confidence, and keeps the transaction moving.

5-Step Checklist: What to Fix in Your Estate Plan Before Selling Your Illinois Business

1. Update Your Ownership Documents

Make sure your operating agreement, shareholder agreement, or corporate bylaws match your estate plan. Conflicts here are one of the biggest causes of delayed closings.

✔ Confirm who inherits your ownership interest
✔ Review transfer restrictions or buy-sell provisions
✔ Ensure successor decision-makers are named consistently

2. Review Your Powers of Attorney

If you become unavailable or incapacitated during due diligence or closing, the deal could be stalled.

✔ Confirm your financial POA authorizes business decisions
✔ Choose someone who understands the transaction
✔ Update healthcare POA to reflect your current wishes

3. Optimize for Taxes

A sale can trigger significant income and estate tax consequences.

✔ Review whether a trust should hold sale proceeds
✔ Explore gifting strategies before the sale
✔ Confirm your plan minimizes estate tax exposure for family members

4. Protect Your Family’s Windfall

After the sale, your business converts into liquid assets — which means new risks.

✔ Set up or update trusts to protect young or inexperienced beneficiaries
✔ Establish asset-protection structures
✔ Plan for distributions, conditions, or long-term management

5. Update Your Business Succession Plan

Even if you’re selling, lenders, buyers, and attorneys want clarity about what happens if something happens to you before closing.

✔ Identify who steps in temporarily
✔ Ensure your estate can legally complete the sale
✔ Update your succession plan to align with the sale timeline

(Link this section to your Business Succession Planning page.)

What Happens If You Don’t Fix Your Estate Plan Before Selling

Failing to update your estate plan can create serious complications for your family and the buyer:

• Probate delays if ownership transfers aren’t clear

• Tax drag from avoidable income or estate taxes

• Disputes among family or co-owners

• A delayed or collapsed closing if documents conflict or no authorized decision-maker exists

A buyer wants certainty. A clean estate plan gives them exactly that.

Preparing to sell your business is a major milestone — and your estate plan should support that transition, not complicate it. With the right updates in place, you can protect your family, minimize taxes, and move through the sale confidently. If you’re planning to sell in the near future, now is the time to make sure your estate plan is ready.