Estate Planning for Small Business Owners
At the Racine Law Office we recognize that not ever person's circumstances are the same. We have assisted numerous estate planning clients in creating their own personalized estate plans and in doing so have seen just about every situation that could arise that needs to be addressed. This includes completing estate plans for individuals and couples who own small businesses.
The needs of an individual or couple who own a small business are going to be much different than a person who does not have a business to consider. This is because their business will be unique, the way they have it set up and structured is unique, and the individuals involved in that business are also unique and will have different needs. While there are no two scenarios that are identical, there are several basic principles involved in estate planning that apply to everyone, even an individual or couple who own and operate a small business.
The Idaho estate planning attorneys on our team at the Racine law office have assisted clients for over 70 years in preparing estate plans that are customized to their own unique needs. This includes assisting owners of small businesses who own and operate farms, ranches, retail stores, service-oriented businesses, and so forth. Through our experience, we have gained the knowledge and skills necessary to help individuals and couples like you with your particular situation too. Our team consists of partners Randy Budge and Lane Erickson and attorneys Nate Palmer and Dave Bagley.
If you are an individual or couple that owns a small business, and you have been considering getting your own estate planning done, we are confident that we can help you. To get you started here are three specific things that you should do or consider when it comes to your own small business and your estate planning.Review the Corporation or Partnership Documents
The first of most important thing that you should start with is to review the corporate or partnership documentation associated with your business. It really doesn't matter whether your business is a corporation or a partnership. Every business entity has documents that exist that control the operation of the business. This is true even if you have not created written documents of your own.
An Idaho a small business owner is given the opportunity to create their own written corporate or partnership documents. However, if the owner of a business fails to do this the statutes in Idaho create a default document through the statutes themselves. It is far better for a business owner to create their own written documents than to rely on the defaults set up by the state of Idaho. Doing so gives you much more freedom and the ability to make specific decisions about what occurs to your business if certain events occur.
Since we are talking about estate planning, your written corporate documents for instance should have language in them that talks about what happens if you or another business owner or partner passes away. Most individuals have not contemplated being in business with their partner's surviving spouse or children. Additionally, if your partner or other business owner decides to sell their interest in the business you probably did not contemplate being in business with a stranger. The corporate documentation you can prepare should provide limitations and control over what happens to a person's ownership interest in the business not only if they die, but also if they become divorced, bankrupt, disabled, or simply decide that they want to get out of the business and sell their share. So as a starting point simply reading the corporate or partnership documents that exist is the starting place that should give you an idea of any limitations that may exist when it comes to your own ownership in your small business and how your estate planning affects your ownership.How a Living Trust Can Help
The second thing that you should understand is that a living trust could be a wonderful estate planning tool for your business to continue without actually providing or naming a successive owner to the business. The way it works is this, you would transfer your ownership interest in the business into a living trust while you are alive. You will then have the ability to name a trustee who will be responsible to continue to operate that business. The first trustee will most likely be you in the beginning, but if you pass away or simply become unable to continue to operate the business, you can name a successor trustee who will then step into your shoes and take over the responsibilities of operating the business.
By using a living trust, you can continue to have the business operate for many decades into the future. This would give you the ability to pass the benefit of the operation of the small business on to your family members down through several generations if you choose. Your living trust will also ultimately make a decision about who either the business or its assets will be distributed to when the trust comes to an end. By doing this, your death does not automatically become a triggering mechanism that would require the business to either be shut down or sold. Rather, using a living trust gives you several more options about how your business can continue on into the future if you want it to.Dealing with Family Owned Businesses
Considering your business as part of your estate plan is vitally important especially if your business is family owned. In Idaho, we commonly work with and deal with family owned farms, ranches, and other types of small businesses that are owned by families. In this instance, usually both spouses and sometimes several children are involved in the operation of the family business. When this occurs, the parents typically have a desire to either pass the business on to those children who have helped them or to provide a share of the value of the business to these children.
Parents also commonly have a desire to provide some financial assistance or distribution to children who even haven't been part of the business. However, this can sometimes create serious problems because of potential hurt feelings that could arise from the children who have stayed and assisted with the building and operation of the business. There are several mechanisms available through your estate planning that would give you the ability to reward those family members who have stayed and helped, with the family business while at the same time providing some distribution to those family members who did not stay. In other words, you have the ability to do what you feel is fair and reasonable for each of your children without jeopardizing the continuing operation of the business after you pass away and without hurting the feelings of your family members.
We have assisted numerous small business owners in completing their own personalized estate plans. We are confident that we have the skill, knowledge and experience to help you too.Enlist an Idaho Estate Planning and Probate Attorney to Help You
Our experienced Estate Planning team of attorneys can help you and your family with your Idaho estate plan or with your probate needs. Whether you are seeking your own customized Estate Plan or need a Probate for a loved one who has passed, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation with the Racine Olson team. You can also email us directly at firstname.lastname@example.org. We will answer your questions and will help you solve your Idaho Estate Planning and Probate problems.