January is a great time to knock out an item on your 2019 to-do list. Estate planning is one of those things everybody needs to do but nobody really wants to do. We understand the sentiment, but we’ve also seen what happens when someone, especially a business owner, fails to make a plan. It’s not pretty. Entrepreneurs and business owners have unique circumstances that make estate planning especially vital to them and the futures of their family and their business.
Make a Will
The first tip seems obvious, but statistics tell the real story. According to the results of a 2017 survey by Caring.com, “A staggering 78 percent of millennials (ages 18-36) do not have a will. Even more surprising is that 64 percent of Generation X (ages 37 to 52) doesn’t have a will, and nearly half of respondents in the 53 to 71-year-old age group (40 percent) said they don’t have one.”
Apparently what seems obvious must be addressed. You need a will (or a trust). Period. Simply speaking, it tells your survivors how you want your assets handled upon your passing. It provides instructions for the who, what, and how of managing your estate.
A basic will transfers the title for property that has title and should include at least the following:
- Executor designation. Who will be responsible for seeing to it that your wishes are carried out?
- Asset list. Tells the executor what assets you own (including social media accounts), how to access them, and who they should transfer to upon your death.
- Guardianship. If you are the caregiver to a special needs child or incapacitated elderly person, you want to leave instructions for who will care for them when you’re gone.
- Pets. What will happen to your pets? Who would you like to care for them in your absence?
Set Up a Trust
There are a variety of reasons to establish a trust, especially when your estate includes a business. Because of the different types of trusts, it’s a good idea to ask an attorney what type of trust you need.
Trusts can be set up to go into effect immediately or upon your death, depending on the purpose. In a trust, you can establish how property will be divided among young children and provide protection from creditors and, in some cases, a trust simplifies the probate process.
Establish Powers of Attorney
The future of your business isn’t just vulnerable when you die, it can be vulnerable if (God forbid) you become incapacitated. A stroke, traumatic brain injury, or any medical occurrence that renders you unconscious leaves you and your business vulnerable. When you establish Powers of Attorney, you are legally designating an individual who will make decisions for you while you’re unable. A medical Power of Attorney enables the designee to make decisions regarding your medical care. A financial Power of Attorney grants the designee the authority to use funds in your name to cover your expenses. They can be the same person or different people, based on what you decide when establishing them.
Determine Life Insurance and Retirement Account Beneficiaries
It’s easy to skip the beneficiary fields when filling out paperwork because you don’t have an address or social security number readily available. However, part of your estate planning process should include those determinations. Often the life insurance funds are intended to be used to cover funeral costs. If the policy gets stuck in an extended probate process to determine the beneficiary, those funds may not be available in time.
Create a Business Plan for Succession
As a business owner, your estate includes the business. You need a plan for who will take over when you pass, who inherits interest in the company, and whether the business is to continue or dissolve. A business attorney will help you with all the details and paperwork necessary for a succession plan.
One Final Tip
Your estate planning should include documentation and instructions regarding a second marriage or blended family. The law doesn’t provide for them otherwise.
The future is uncertain. Contact an estate lawyer at Lovelace Law today to get your estate in order. You know it needs to be done. Let’s do it together. The future of your family and business depend on it.