If you run a business in New York City, your company is probably your largest and least liquid asset. Yet the estate plans we see from Manhattan and Brooklyn founders almost always treat the business as an afterthought. Here are the mistakes that cost owners the most, and how to sidestep them.
Mistake 1: Having no buy-sell agreement
Without a buy-sell agreement, your death can hand a co-owner’s stake to a spouse or child who has no role in the company, or leave your family with no buyer at all. A funded buy-sell, often backed by life insurance, sets the price and the mechanics in advance. For a multi-member LLC operating out of a shared NYC office, this is the single most important document after the operating agreement itself.
Mistake 2: Letting the business run through probate
A sole proprietorship or membership interest held only in your name passes through your will, which means probate in the Surrogate’s Court for your county (New York, Kings, Queens, Bronx, or Richmond). Under the SCPA, that process can take many months, during which signing authority, payroll, and lease decisions stall. Holding the interest in a revocable trust under EPTL Article 7 keeps the business out of probate so operations continue without a court-appointed gap. Note that a revocable trust avoids probate but provides no estate tax saving on its own.
Mistake 3: Ignoring the NY estate tax cliff
New York’s 2026 estate tax exclusion is $7,350,000. The dangerous part is the cliff: if your taxable estate exceeds roughly $7,717,500 (about 105% of the exclusion), you lose the exclusion entirely and tax applies to the whole estate, not just the excess. A successful NYC business can push you over that line faster than you expect. Irrevocable trusts can move appreciating company value out of your taxable estate, but they are permanent and should be coordinated with gifting strategy.
Mistake 4: No one can sign while you are incapacitated
Death is not the only risk. A stroke or accident can leave you unable to authorize a wire or sign a contract. A New York statutory durable power of attorney under GOL §5-1513, with the optional rider granting gifting and business authority, lets a trusted agent keep the company running. Pair it with a health care proxy under PHL Article 29-C so medical decisions are covered too.
Mistake 5: Stale documents after partner or family changes
Operating agreements, beneficiary designations, and buy-sell terms drift out of sync as partners join or leave and as your family grows. A retail owner in Queens who added two partners but never updated the succession provision can leave heirs litigating control. Review these documents whenever ownership or your family situation changes.
Coordinating with your will
Your New York will must meet EPTL §3-2.1: signed at the end, witnessed by two people within a 30-day window. If you die without one, EPTL Article 4 intestacy rules decide who inherits, which rarely matches a business owner’s wishes. Make sure the will, trust, and company documents tell one consistent story.
Consult a New York attorney
Business succession sits at the intersection of NY estate, tax, and entity law, and the estate tax cliff leaves little margin for error. Before relying on a template, speak with a qualified New York estate planning attorney who can align your company documents with your personal plan.
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