What Happens to Your Business After You Die
By Lane V. Erickson, Pocatello Estate Planning Attorney
The website Small Business Trends (smallbiztrends.com) created a report that indicated that hundreds of thousands of new small businesses are started each year by individuals in the United States. The National Associates of Small Business’s prepared a 2017 Economic Report stating that 35% of all small businesses are created as LLCs. Next we have S corporations which comprises about 32% of all small businesses. After that the report indicates that regular corporations equal 19% and sole proprietorships equal 12% of all small businesses. Finally, Partnerships comprise the last 2% of small businesses.
When it comes to the success rate of small businesses, the same report stated that in the year 2014 about 80% of new businesses made it into the year 2015, 70% made it into the year 2016, 62% made it into the year 2017, 56% made it into the year 2018, and it is expected that about 44% of new businesses started in 2014 will make it into and through the year 2019. From this report and these statistics it appears that the success rate of small businesses in the United States is much higher than most people would have expected.
The statistics provided by this report also reflect the trends that exist for small businesses in Pocatello. When we assist our clients in Pocatello who have small businesses in Pocatello complete their estate planning, we always discuss with them how their estate planning can protect their business even after they are gone.
The premier Pocatello estate planning attorneys at the Racine Law firm have helped clients who own small businesses for more than 70 years complete their own customized estate planning that includes provisions and plans to keep their business operating. Our team consists of partners Randy Budge, and Lane Erickson, and attorneys Nate Palmer and Dave Bagley. Each of our attorneys has received the highest ratings possible on several legal rating services, including Martindale and Hubbell, AVVO, and Justia. These ratings are earned based on feedback from clients, other attorneys and the judges we work with on a regular basis. Given our experience we believe that every client who owns a small business can benefit from having a customized estate plan. Based on our experience we are confident that we can help you.
So, if you are the owner of a small business in Pocatello what are the most important things that you should know about your own estate planning? First, you need to understand why your estate planning documents are important. Second, you need to understand how your own corporate documents can help you transfer your small business to others after you pass away. Third, you need to know how important it is in getting help from a qualified estate planning attorney so your business is protected and distributed to those you want to receive it after you are gone.Your Estate Planning Documents
When it comes to protecting your small business we cannot overstate the importance of your personal estate planning documents. For example, a basic estate plan includes a last will and testament, a durable power of attorney, a power of attorney for health care, and a living will. A more complex estate plan may include these documents as well as a variety of trusts. Each of these documents may play a role in protecting and operating your small business both while you are alive, and after you pass away.
Consider for a moment your durable power of attorney document. Suppose that due to an injury or an illness you suddenly become disabled. If you are no longer able to care for or run your own small business, your durable power of attorney document will name an person that you have chosen who would have the legal authority and power to step in and operate your business while you are alive. If you use a trust as part of your estate plan you can create a plan that allows your business operation to continue even after you have passed away. If you don’t use a trust, your last will and testament will determine and name who your ownership interest in your business will be given to after you die.
As you can see from these examples, your estate planning documents could have an impact on the operation of your business both while you are alive and even after you pass away. Its for these reasons that we believe all business owners should complete at least a basic estate plan. Given your business structure and your goals you may need something more than a basic estate plan. By having a completed estate plan you have the opportunity to think about and create a plan for both the operation of your business while you are alive and the transfer of your business to others after you pass away.The Corporate Documents for Your Business
To be completely clear, your estate planning documents are not the only game in town when it comes to your business. You should also have corporate documents that could provide direction on what happens in the operation and ownership of your business over time. As an example, if your business was created as an LLC, one of the documents you should have is a well-crafted written Operating Agreement that is signed by all the owners of the LLC.
An Operating Agreement is a legal contract for everyone who signs it. Again, all of the owners of the LLC should do this so there are no misunderstandings between the owners of the business about how it is to be operated. Owners can use an Operating Agreement to spell out who manages the business, what the percentage of ownership in the business each person has, how voting works what it comes to the operation of the business, and most importantly, what happens to a person’s ownership interest in the business if they become disabled or if they die. As you can see a well-written Operating Agreement is a crucial part of both your business plan and estate plan.
Even if your business isn’t an LLC your corporate documents are still vital. For example, if your small business is operated through an S corporation, the basic corporate documents you should have include your articles of incorporation, your bylaws and your corporate minutes or records. These documents contain and describe the same types of information and options that an Operating Agreement does for an LLC.Why You Need an Attorney to Help
There is so much information, and so many options available to a business owner when it comes to both corporate planning and estate planning that it cannot all be listed in a short web-article. More importantly, anything listed in an article can only state general options and choices. However, when it comes to your business, you need to be specific about the unique needs and circumstances it may have. In other words, general knowledge is good, but specific knowledge is better. Each business is unique, and the options available in through both corporate planning and estate planning requires well-thought-out documents with specific language based on the particular circumstances and needs of your business. It’s for this reason that we always recommend that our clients seek help from a qualified estate planning or business law attorney to help them create these documents in a way that will benefit both them individually and their businesses as well.
We have assisted numerous clients with both their Estate Planning and their business documentation. We have the expertise in the knowledge necessary to answer questions and to help our clients make decisions that will be in their best interest. We are confident that we can answer your questions and help you too.Enlist a Pocatello Estate Planning Attorney to Help You
Our team of Pocatello lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, 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. You can also email us directly at email@example.com or stop by our office at 201 East Center Street, Pocatello, Pocatello 83201. We will answer your questions and help you solve your Pocatello Estate Planning problems.