Whether you run a restaurant in Sunset Park, a contracting company in Gowanus, or a professional practice in Downtown Brooklyn, your business is likely your largest and least liquid asset. That makes it the part of your estate most likely to be mishandled. Here are the mistakes Brooklyn business owners make most, and how to avoid them.
Mistake 1: No Succession Plan at All
Many owners assume the business will simply carry on. Without a plan, ownership passes through your will under EPTL section 3-2.1 or, if you have none, by intestacy under EPTL Article 4, potentially handing control to heirs who cannot run it or who clash with your partners. A written succession plan naming who takes over operations and who inherits value is the foundation everything else builds on.
Mistake 2: No Buy-Sell Agreement
If you have co-owners, the absence of a buy-sell agreement is the classic Brooklyn small-business disaster. Without one, a deceased owner’s spouse or children can inherit a stake and become unwanted partners. A buy-sell agreement, often funded with life insurance, sets the price and terms so surviving owners can buy out the estate and the family receives cash instead of a stake they cannot use.
Mistake 3: Ignoring the New York Estate Tax Cliff
A successful business plus Brooklyn real estate can push an estate past the New York estate tax threshold faster than owners expect. The 2026 New York exclusion is $7,350,000, but New York applies a cliff: exceed roughly 105 percent of the exclusion (about $7,717,500) and you lose the exclusion entirely, with tax on the whole estate. An illiquid business can leave heirs owing tax with no cash to pay it. Planning ahead, sometimes with an irrevocable trust under EPTL Article 7 to shift value out of the taxable estate, prevents a forced sale.
Mistake 4: Holding Everything in Your Personal Name
If the business and its property sit in your name, they go through Surrogate’s Court probate, which can freeze operations for months while letters are issued. Holding interests through an entity, and in some cases a revocable trust under EPTL Article 7, can keep the business running without a probate pause. Note that a revocable trust avoids probate but does not by itself save estate tax.
Mistake 5: No Authority During Incapacity
Death is not the only risk. If you are sidelined by illness, who signs checks and contracts? A durable power of attorney under General Obligations Law section 5-1513, drafted to cover business decisions, keeps the company functioning, and a health care proxy under Public Health Law Article 29-C handles medical decisions so the two roles never collide.
Mistake 6: Letting Documents Go Stale
A buy-sell value set five years ago or a partner who has since left makes your plan dangerous, not protective. Review the business plan whenever ownership, value, or partners change.
Consult a New York Attorney
Business succession touches tax, partnership, and probate law at once, and generic forms cannot coordinate them. Work with a qualified New York estate planning attorney experienced with Brooklyn business owners and the Kings County Surrogate’s Court to keep what you built intact.
