Estate Planning for attorneys, doctors, business owners, licensed individuals, and other professionals is often overlooked or delayed. Almost everyone procrastinates. An article in an American Bar Association newsletter serves to remind attorneys that when it comes to estate planning, they need to act on their own advice.
Keeping what you have is more important than making more money, and no one likes to think about mental incapacity or death. But, if you wait, all could be lost by a surprise lawsuit, medical emergency, or tax problems. Business owners and professionals have an ethical duty to protect their customers, their clients’ interests, and most importantly their families at all times…including times of death or disability.
Owners often overlook the proper separation of assets, including real property, liquid assets, trademarks, inventory, accounts receivable, and intellectual property. Without private asset protection, a judgment brought against your business or you as an individual could cost everything you have earned. The way to avoid losing assets to a lawsuit or other claim is to protect what you have in separate Private Asset Protection Trusts. If married, asset protection applies there too, with marital property planning considerations.
Shelter Before The Storm
You may need to set up multiple private asset trusts to shelter everything from your home to your business equipment, any other real property, and any liquid assets. The way this works best is by separating the significant assets as much as possible so that if a judgment is brought against one entity in your possession, it cannot go after the assets or monies that are held by the other entities.
If someone sues your company, an executive, or an employee, they can only attack what that company owns. If the company is an Private Asset Trust, LLC, or Corporation; and all it owns is the business name used to run the business, the judgment can only go after those assets (the business name). Additionally, if someone sues you as an individual, they would not be able to go after the assets held by your other Private Asset Trusts, or those assets not held in your name.
Estate Planning Tips
Some tips for professionals and business owners in their estate plans:
Make arrangements for the firm to continue, close, or transfer the business on your behalf.
Have the appropriate powers of attorney in place so that others can maintain business. They will need to be able to sign checks, do banking, manage employees, and generally conduct business on your behalf. Consider having a limited power of attorney specifically for a professional who will take over as successor.
Consider naming at least one executor in your will who is a non-family member to be charged with the responsibility of selling or closing the business.
Maintain an easily understandable system of customer records for all to understand.
Review the choice of business entity for liability protection and tax obligations.
Create rules to regulate any conflict of interest and mediator for emergencies.
Make sure there are appropriate protections in place for confidentiality.
Ensure you have estate planning strategies in place to protect cross damage of personal assets and business.