Do you own your own business? If so, you should have a plan for your business after your death or in case you become disabled. There are three documents which can help you include your company in your estate plan.
Financial Power of Attorney
A financial power of attorney (POA) is an instrument that allows you to name someone to control your financial assets when you are unavailable. It’s important your POA qualify as a “durable” POA. Having the POA created as a durable POA is important because that means it stays in effect beyond the point when you are determined to be disabled.
Then the question is when your POA comes into effect. Your POA can be either “springing” or “immediate.” If it is immediate, then the financial agent you appoint as your POA can exercise their power on your behalf at any time, even while you are still alive and well. In that case, the durable financial power of attorney may be used to allow your spouse or a family member to sign on your behalf if you are temporarily unavailable.
If you wish to keep your business and financial interest solely in your control, a “springing” financial power of attorney will not go into effect until a doctor – or sometimes two – says you are mentally or physically unable to control your own assets. Only then will your financial agent have control of your finances and business, and that person must use them for your benefit.
Last Will and Testament
In your Last Will and Testament you can name someone to take over your company upon your death, or you can state other arrangements to be made. You cannot use your Will to designate an agent to take over if you should become incapacitated. That’s what the POA is for.
Discuss with your family what their wishes are for your business after your death. If someone wants to take over, name them in your Will. If no one is available to run your company, you can make provisions for your business to be sold after you die. The downside to using a Will for business estate planning is that a prolonged probate process may damage your business as it waits for a final verdict on its future.
Revocable Living Trust
A Living Trust is a great asset to your estate both while you are alive and after your death. If you decide to use a Trust for your estate plan, you can include terms for the management and continuity of your business interests. By doing so, you are giving your Trustee the ability to run your company in the event of your incapacitation or death. A Trust can help your company maintain stability and continue to provide a source of income to your loved ones until the matter of your estate can be sorted out. As with a Will, you must determine if someone will take over the company or if it will be sold. The good news is, a Trust lets both options happen smoothly and quite often without probate in court.
Larry Parman
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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