Estate planning is an important element to consider for entrepreneurs. As an entrepreneur, you have blazed your own trail and created everything you’ve attained from scratch. In order to ensure that your business and other assets thrive for years to come, it is important to have your legal documents and a business continuation plan in case anything ever happened to you.
Documents such as master files, wills and trusts specify how your affairs should be handled and what their fate is in the future. Creating these documents and utilizing a notary signing service is critical to ensure the future of your business and the ones you love. Consider the following tips for handling your own estate planning and legal documentation.
One of the initial steps of planning your company’s future beyond your lifetime is choosing a successor. This can often be a difficult first step, especially if your business is a family company. While your successor is often a position reserved for your oldest son or daughter, it is important to consider the individuals experience, qualifications and desire to run the business after you’re gone.
Agreeing upon a successor in a legal document is the safest way to dictate the fate of your company without you at the reigns. A will or a trust (or both) are documents that will allow you to legally designate your company’s successor via a national notary or nationwide signing services.
A master file is one of the most important documents a business owner can draft, as it contains the information necessary to operate the business. When the time comes to step down from your post, someone will need proper instruction in order to carry on and push the operation forward. This instruction should come in the form of a detailed list of important information necessary to handle the organization’s day-to-day operations.
Having all of these pieces in place for your successor will make the transition smooth and allow for the continuity of your business. You will want to leave your business in capable hands, a master list will give them the tools necessary to keep things moving forward.
Creating a will is another crucial aspect of estate planning for entrepreneurs. In order to secure the future of your business and its assets, you should include in your will who your successor will be or who should receive your business and financial assets after you die.
In order to create a will, you’ll need to draft a list with the aforementioned items and find an organization that offers notary signing services to make it a legally binding document. A will establishes your wishes far beyond verbal agreements with family members and friends. Also, a will has the advantage of reducing the burden of estate taxes and maximizing the funds available to your loved ones.
Aside from solidifying the fate of your finances, a will can include a variety of other items.
Having a will drafted that addresses these items will give you peace of mind that your wishes will be carried out in your stead. This is a much more desirable alternative in comparison to allowing the state to sort your affairs in a lengthy and costly process.
Drafting a Will
While the integral pieces of a will have been laid out, the physical creation of the document is another important point. A lawyer can write a will professionally or you have the option to write it yourself and sign it in front of a notary public. The advantage of drafting a will yourself is financial, as fees for estate planning have risen in recent years.
A basic formula for drafting your own will is to calculate your assets, select your heirs and select a witness and executor. From there it is simply a matter of writing the document’s specifics and researching signing services.
Limitations of a Will
There’s no arguing the fact that a will is a binding legal document that ensures the destiny of your personal and professional assets. The problem is that wills have a variety of limitations and disadvantages.
One of the key disadvantages of a will is the legal process of probate. Wills are required by law to enter into court proceedings that can last up to a year as the court distributes assets according to the document. This can be a major issue from a business perspective, as your business needs to come under new ownership and its funds need to be available immediately. It is for this reason that a trust is a valuable addition to a will, as it allows beneficiaries to receive assets immediately after the grantor’s passing.
Just as a will is a form of protection for your assets, you might also elect to set up a trust to further designate the distribution of your property and business assets. A trust can be utilized to plan how an inheritance will be distributed to children. It can also be used to distribute your assets in phases and eliminate the costly impact of probate.
A trust gives you explicit control of how and when items are allocated to beneficiaries. For example, you may designate who your business is turned over to and in what stages.
The key difference between a trust and a will is that a trust is more limited in what legal items it can and can’t address. For example, a trust can’t designate a guardian for your children or pets as a will can.
While a will is best suited for handling personal items, a trust is the best way to hand down your business assets. This is due to the fact that a trust is a private document, meaning that it doesn’t need to be reviewed by a court and avoids probate.
Another thing to consider is that there are certain items that do not belong in a trust. Personal checking accounts, items that are bought and sold frequently, and property of little value are all items that shouldn’t be placed in a trust. These items aren’t as permanent as those previously mentioned, and therefore might not be around when a trust can finally be accessed or aren’t valuable enough to enter into probate in the first place. In terms of handling those assets, you are better off selling them or distributing them in person in order to retain their value.
As for making your trust official, utilizing a signing service or a mobile notary signing service is a final step that will make your trust a binding legal document. Mobile notaries make it possible to handle this critical step via a tablet or mobile device, saving you the hassle of tracking down notaries public services.
Aside from a living trust, entrepreneurs have a variety of specialized options to suit their circumstances. For example, a special-needs trust can provide funds to pay for the future medical fees of disabled loved ones.
Power of Attorney
While your will and master file will designate who will continue to run your business, how they go about it and who inherits your assets, you still need to grant someone the right to access them. Bank accounts, property and securities are all items that require an individual who has been granted the power of attorney in order to receive access.
State laws involving this process vary from state to state, with some states simply requiring a verbal agreement or a self-written document. On the other hand, other states require that a signed power of attorney be notarized. If this is the case in your state, finding a mobile notary signing agent is a viable option that can save time and make the process more efficient.
Partnership Buyout Agreements
If you are not the sole owner of a business, it is important to set guidelines with your partners for what will happen after you are gone. A buyout agreement will dictate this process, as it will determine whether or not you actually need to be bought out by the other partners and the cost of such a buyout.
Not only will this document lay out the proceedings in the event of the death of a partner, it will also handle situations in which a partner resigns or is no longer able to run the business due to a health issue. Without a buyout agreement in place, the government may choose to dissolve the partnership and force the remaining partners to divide the company’s assets.
Drafting a buyout agreement will designate exactly how much a former partner is owed or whether or not they will continue to have a claim to the company. From the perspective of the individual, this is critical to ensure that your family is compensated properly if something should happen to you.
Being prudent with legal documentation is the key to ensuring that your legacy and life’s work are protected in the future. Take the time to create the aforementioned documents in order to allow your family to enjoy the fruits of your labor for years to come.