Estate Planning Blog

Estate Planning for Your Small Business in Sacramento

October 30, 2012

When it’s time to start your estate planning process (that time is right now, by the way), entrepreneurs need to remember to take their small businesses into consideration. Whether you own the entire business outright and work for yourself or you simply own a portion of the entity, you will need to leave instructions for your family to follow.

By working with a Sacramento business lawyer and/or estate planning attorney in advance, you can save your family, business partners, and even your customers from a lot of hassle down the road. What happens to the business may depend on the form of ownership you have.

Sole Proprietorship: Generally speaking, if a sole proprietor dies, the business can come to a rather abrupt end. If there is someone you trust who is interested in taking it over when you are no longer able to run it yourself, it would be a good idea to stipulate that the assets of the business are inherited (or possibly purchased) by that individual.

Partnership: It’s likely that your partnership agreement has already laid out plans for what will happen when you or one of the other partners passes away. If not, then it makes sense to get together with the other partners to come up with a workable plan. It’s usually not too difficult for this type of business to continue after the death of one partner, although the surviving partners may have to buy out your interest with the money most likely going to your heirs.

Limited Liability Company: Unless you have stipulated otherwise in the operating agreement, an LLC will typically dissolve once one of the members dies.

Corporation: When one owner of a corporation passes away, it doesn’t usually have major legal implications for the corporation. Shares that the member held will usually be transferred to his or her heirs. They may also be purchased by the corporation. It’s not unusual for this topic to be addressed within a shareholder’s agreement.

Professionals: If you are a lawyer, doctor, dentist, pharmacist, or other licensed professional, planning for your business upon your death or incapacity is especially important. If a license is required for you to practice only another licensed individual may wrap up or continue your practice. Including a “Practice Administrator” as part of your planning will enable your loved ones to easily take care of your business; without one they may be stuck with a stranger running your affairs.

Any good business planning lawyer in Sacramento will advise you on ways to help the business transition should you become incapacitated or deceased. A common approach is to set up a succession plan. There are many aspects to a succession plan, but some of the most important pieces include designating someone who will take over in your absence as well as training that person to be ready when the time comes.

Succession plans can seem a bit daunting, especially for the sole proprietor who hasn’t put much thought at all into if or how the business would survive without them. Exploring these topics with a business planning or estate planning lawyer in Sacramento will get you started moving in the right direction, whatever your small business’ needs are.

Call The Chubb Law Firm today at (916) 241-9661 to review your goals and discuss your options.

Free Resources

CLIENT Story

I was absolutely without a clue as to how to begin or what I should do to establish an estate plan. I did know that I wanted someone I could trust, that was honest and I would have confidence in. I was referred to Heather by my friend who was being legally advised by Heather on another estate. She was very satisfied with her work and thought I might be happy with her service. At our consultation appointment, her presentation was very thorough. I had lots of questions, and she was easy to talk to and was able to guide me to just the kind of estate plan I needed. That was 10 years ago. Due to circumstances in my life, I have had to make changes to my plan, and I always go back to her for her legal services and guidance. I have recommended Heather before.
Gwen

As Seen On