It's has been said that a privately held business is the most vulnerable 6 months before and 6 months after the death the business owner.
Have you put a plan in place to make sure your business will continue? Have you taken the steps needed to ensure probate is an efficient process rather than a business killer?
1.Trusts - Putting your assets in a trust doesn't solve all estate planning issues. If, however, you have your business interest correctly titled in a living trust, it's true that the business will avoid probate. When doing trust planning for your business, be sure to differentiate between a revocable trust and an irrevocable trust. Both can avoid probate, but they serve different purposes.
2. Real Estate - If your business is a separate legal entity and owns real property, it is an asset of the business and flows with the disposition of the business interest. In many cases, however, the real estate is owned separately, and the owner rents the property to the business. In this case, probate can be avoided by titling the real estate in joint ownership with right of survivor-ship, in a life estate or, in some states, with a transfer on death (TOD) deed. All three approaches avoid probate.
3. Personal Property and Insurance - There are other assets related to the business which may be personally held. A business owner may license a patent to the company. Or business owners may take out life insurance policies on each other's lives and own the policies personally, but that does not protect them if business goes to probate.Attention to titling and beneficiary designations - in advance - is needed to expedite disposition of these assets.
4. Wills, Executors and Powers of Attorney - From a legal perspective, the probate court works with whatever the decedent leaves in terms of instructions. But these instructions must be properly and legally executed. At the management level, the company needs someone identified in advance to run the business while probate proceeds. Arrangements for maintaining company cash flow and family income should be sorted through beforehand.
5. Business Continuation - The most important step a business owner can take regarding the disposition of the business at death is to have a predetermined business continuation plan. Next, the ongoing management of the company must be known in advance. Salaries, rent and debts must be paid. Operations must continue. And finally, the funding of the plan must be in place.