Is Estate Planning a part of your small business strategic plan?  It should be.  Yes, estate planning is complicated in the simplest scenarios, but, an operating business requires expert advice and planning. Don’t leave this to an insurance agent or on-line template.

The success – or failure – of your small business is a large part of your estate planning. Many of my clients had previously overlooked this essential part of the strategic planning process, but it shouldn’t be ignored.  After all, your ambition put you on your small business journey, and I must assume you want your family to share or benefit from your dreams. Estate planning will make you – and your lenders – more comfortable knowing that you have anticipated every contingency. Partners, trademarks, patents, etc. all complicate this, but you need to make a start.

As part of a strategic plan, you need a Living Trust – sooner than later. A Trust places your estate or assets in the hands of a Trustee, someone you have faith will distribute your assets as you wish.
A Living Trust is one you establish while you are alive, so you can design it the way you want without leaving it to some future judge, lawyer, or banker. There are three parties to every Living Trust. You are the Grantor; the administrator is the Trustee, and the Beneficiaries are your spouse, children, partners, etc.

Now, because the Living Trust holds the title to the assets of the business, it lives outside the world of estate taxes and probate courts. In addition, privacy is assured. There is no public scrutiny as there would be in probate court. And, most beneficial of all, because the Trust carries out your exact expressed wishes, you avoid family disputes and contested wills. There is simply no argument because the Trust is doing what you asked.

Since the risk of disabling accident or disease is high, you and your business are laid bare without a Living Trust and its Power of Attorney. You can share bank accounts, licenses, and deeds with a spouse or child, but when the parent dies, there is little direction on managing the asset or the business.

So, you assign a Durable Power of Attorney. This document names the person or persons you want to handle your financial affairs. For the average guy or gal, the Durable Power of Attorney will do the trick. But, I recommend a Revocable Living Trust. The Durable Power of Attorney has some weaknesses. Some financial institutions reluctant to deal when there is a power of attorney in the mix. And, it may present some conflicts – if only perceived ones – with your attorney-in-fact. In contrast, a Revocable Living Trust lets your Trustee move into position when you resign or become disabled. Your business management continues smoothly, and no court interferes. Since the Revocable Living Trust is more welcome in the financial community, it is the way to go.

Don’t get lost in this process. Seek professional experience. Integrate your business assets – and property, tangible and intangible – with your will, trusts, powers of attorney, insurance, investments, etc. Plan now, and reserve your right to future revision, on who inherits the assets and management of the business, how it is managed and who shares in its success, vested partners and employees as well as family.


By Steven Schlagel