How prepared are you for life’s unforeseen moments? As an entrepreneur, it’s your responsibility to envision the future, consider all the possibilities, and make sure that every outcome leans in your favor as much as possible. But what if one of these events is your untimely passing? It’s not a pleasant topic to discuss, but it is a practical one. You have to examine the repercussions of this event and how secured your business and beneficiaries will be when it occurs.
Contrary to popular media, personal assets can’t just be distributed to loved ones and business partners without taking the necessary legal arrangements. This is just the tip of the iceberg, however. You might be surprised at how complex the situation can get if you don’t start planning now.
Keeping Your Business Alive
Every business has its governing documents, namely its bylaws. This is your first and most important reference because it defines the core structure or the skeleton of any corporation. If yours is a limited liability company, then yours is defined by your operating agreement.
What you need to look for are provisions that address the death or disability of any member. Disability refers to any impairment, either physical or mental, that prohibits the person from going on with their lives like they used to. This impairment could last months or even for the rest of that person’s life. If the situation is permanent, as is with death, one of the most common provisions is the automatic offer for that member’s interest to be sold to the others.
For some, the most logical and anticipated course of action would be to hand over the membership interest to the nearest kin. This is not a wise move in many corporations and LLCs because the kin might not be qualified to run the business. Furthermore, it could violate certain aspects of your business structure, particularly in terms of tax, if an heir is involved.
Does this rob your spouse or children of the opportunity to benefit from your hard work? Doesn’t a “sale” burden your business financially? Not if your provisions are set correctly, and you’ve strategized your way around the most common obstacles.
Some companies make sure their members are fully insured in cases like this. When a permanent disability or death occurs, the policy will assist in repurchasing the membership interest. It also means that your spouse or immediate family will receive a considerable payout.
Study your bylaws or operating agreements and consult with a lawyer to fine-tune them. Death is a big enough loss in the company’s management. It won’t improve its prospects if there are no clear provisions for such instances.
Ensuring Your Family’s Protection
You don’t need to own a mansion in Texas to need the services of an estate-planning expert. Dallas has numerous reputable selections that can make sure that your assets, regardless of size, will be protected in case of your death. What is it protecting your asset from? Without an estate plan, your personal assets will be redirected to a probate court, which will then result in time-consuming and expensive probate proceedings. This puts a lot of strain on your spouse and children and robs them of the fruit of your labor.
The best solution is to create a trust. This will enable your attorney to manage your assets after your death and guarantee that they’ll reach your beneficiaries accordingly. Should you suffer from an untimely death, for instance, a trust will make sure that there are enough funds for your children’s education and your spouse’s medical needs, if any. There are many ways you can use a trust to take care of your loved ones, and an estate planning lawyer will equip you to make the most of them.
Another way you can do this through wills and important documents, specifically a durable power of attorney and designation of patient. The former gives any person you desire to pursue legal actions on your behalf if you’re not able to, and the latter is to make decisions about your care should you not be in the right health to do so.
Making Wise Decisions Early
Death is an inevitable part of life, and whether you like it or not, it’s going to affect your business and your family. The best thing you can do now is to take care of it while you can. In case of accidents or illnesses, you can rest assured that all your hard work and important relationships will benefit from your life one way or another.