A probate lawyer knows that one of the things that many business owners fail to address is planning for healthcare emergencies and what will happen to the business should they become sick, injured, or suddenly disabled.
Estate Planning: Protecting your Assets
If you are a member of a partnership or Limited Liability Company (LLC), a plan for your sudden death or disability should be written clearly into your estate planning documents. This means not only designating a successor to your ownership interests if you die but also providing for power of attorney and other key decision-making functions related to the business if you become disabled.
Business ownership interest transfers can be designated through a will or trust document – but when it comes to management decisions, the business’s founding documents should clearly spell out procedures for how the business should continue to run in the absence of a sick or injured officer.
Business Planning: Management Contingencies
In the case of a corporation, the articles of incorporation and corporate bylaws should contain procedures for temporarily and permanently replacing the CEO in an emergency. If the corporation is privately held, these documents are generally rather easy to amend, as all the shareholders should share enough common interests to agree on a procedure for succession. It is even easier if all shares are owned by a single person. In the case of a publicly held corporation, getting a majority of shareholders on board with the change can be far more complicated. In any event, it is easiest to include these provisions in the first iteration of a corporate charter. Regardless of how corporate ownership is divided, the forms and structures of a corporation are tightly regulated and it is very important to ensure procedural compliance.
In the case of a partnership, the partnership agreement should specify contingencies for the illness, injury, or death of a partner. Most partnership agreements will specify these arrangements from the beginning. A partnership agreement is just a contract. Modifying it to include such arrangements only requires the consent of each partner.
An LLC should contain these procedures in its operating agreement. Operating agreements may contain their own procedures for modification. Generally, these are the easiest of all founding documents to amend, particularly if there is only one member (which is not uncommon).
Contact an Estate Planning Law Firm Today
If you own a business and would like more information about putting together your estate plan, including the different types of trusts that may be beneficial to you, make sure you speak with a lawyer who is skilled and knowledgeable in estate law. Call an experienced attorney, like a probate lawyer from a law firm like Carpenter & Lewis PLLC.