Estate Planning: What Every Business Owner Must Have (even if you’re single or broke)

Every business owner needs some basic estate planning documents, even if one who is single with nodependents, or whose business is not “worth anything” yet.  Think of your business, clients, and customers as dependents of a sort that need to be considered in case you were no longer around.  If you have a spouse, life partner, or children, you definitely need to consider estate planning documents to provide for what would happen if you were incapacitated (i.e., coma, vegetable — fun subject, huh?) or if you passed away.

Here are the documents you may need to obtain:

• Healthcare Directive or Power of Attorney for Healthcare.  Everyone age 18 and over should have this document.  It says not only what you would want done if you were out of it but empowers who should make the decision.  Do your loved ones a favor, and get this taken care of now.
• Power of Attorney.  This document gives another person power to handle your finances in your absence.  This may include paying your bills, negotiating a lease, meeting with your attorney, or working with your bank.  You can give them power immediately or only upon your incapacity.  
• Will.  A will says who you want to get your stuff, who should handle your affairs upon your passing, and who you want to be a guardian for your children.  This usually must be formally executed to be valid, typically with 2-3 witnesses, depending upon state law.  Everyone should have a will.
• Living Trust.  A revocable living trust is where you take most if not all of what you own, and re-title it to be owned by the trust.  While you are alive and have capacity, it’s a legal fiction (you still own the stuff, pay the taxes, etc.).  But as soon as you pass away, the successor trustee you choose automatically takes over to handle the trust’s affairs.  Using a living trust you may be able to avoid probate in your state, reduce estate taxes, and avoid a public display of your personal affairs in probate court.   Whether you need a living trust depends upon your situation and your state.
• Other documents:  Some of you may need other documents, such as property agreements, living together agreements, pre-nuptial agreements, irrevocable trusts, special needs trusts, or life insurance trusts.  

Can you draft these documents yourself?  

It depends upon the complexity of your situation, the amount of money at stake, your tolerance for dealing with legal stuff, and your state law.  If you have minor children, special needs children, particular opinions about what you want to have happen, a solid net worth, extensive real estate, and/or a rapidly growing business, consider consulting with an attorney.  Warning — if you do draft documents yourself using software or forms, make sure they are up to date, tailored for the law of your state and/or country, and are property executed.

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