What if your will says one thing and your buy-sell agreement says another? It happens more often than you would think, and most owners have no idea it is a problem until someone tries to enforce one of the documents.
I want to walk through how this conflict happens, why it matters, and what it costs a family when nobody catches it in time.
1. How the conflict actually happens
Your will or trust might leave your business interest equally to all of your children. Meanwhile, your buy-sell agreement, or the transfer restrictions in your operating agreement, might say that ownership can only pass to certain people, or that the company or surviving owners must buy out a deceased owner's interest at a set formula.
These documents are usually drafted at different times, sometimes by different attorneys, sometimes years apart. Nobody sits down and checks whether they agree with each other. They often do not.
2. Why this creates real problems
If your estate plan gives your business interest to children who are not licensed, not involved in the business, or specifically excluded under the buy-sell agreement, you have created a document that cannot be honored as written. Something has to give.
The buy-sell agreement, if properly drafted and funded, usually controls the transfer of the ownership interest itself, regardless of what your will says. That can mean a child who expected to inherit a piece of the business instead receives a mandatory buyout at whatever price or formula the buy-sell agreement sets, sometimes far less than what the child assumed the business was worth.
3. Why coordinated review matters
Business succession documents and personal estate planning documents need to be reviewed together, not in isolation. If different attorneys handle each side, they need to talk to each other, or at least read each other's work.
I recommend clients revisit both sets of documents at the same time, on a regular schedule and after any major change: a new partner, a divorce, a child joining or leaving the business, or a significant change in the value of the company. A buy-sell agreement that made sense ten years ago may no longer match your current wishes or your current ownership structure.
4. What happens when nobody resolves it
Unresolved conflicts between these documents tend to surface at the worst possible time, right after an owner's death, when emotions are already high. Surviving family members may end up in litigation over which document controls. Business partners may be forced into a buyout they cannot afford on short notice. Children may feel betrayed when they learn the will's promise cannot actually be delivered.
None of this requires bad intentions from anyone. It just requires two sets of important documents that were never asked to agree with each other.
5. The fix is simpler than the fallout
Coordinating these documents is not complicated. It usually means a conversation, a comparison of terms, and some adjustments to bring the will, the trust, and the buy-sell agreement into alignment with what you actually want to happen.
If you have a business and an estate plan and you are not sure whether they agree with each other, reach out through blgattorney.com or call my Oklahoma City office. It is a much easier conversation to have now than after the fact.