As a business and real estate lawyer, I spend a good amount of time speaking with Clients about the futures of their operations and investments. While they are alive.
We consider business entities, contracts, customers, marketing, employees, vendors, finance, risk management strategies, insurance, and even ‘exit strategies’ (such as passing a business to family or employees, private sales, or going-public).
But we also envision long beyond that. As much as all of us may wish, none of us (yet) will live forever. There will come a time when we will pass, which will not be known until that time arrives.
So, one of the five ‘intake’ questions 1 I ask of every Client is:
Do you have an estate plan, such as trust or will?
Why do I ask you? Because when you pass do you want to have a ‘say’ into what becomes of the fruits of your life’s labors? Or will you be satisfied with having an unknown man or woman in a black robe, holding a law book, decide what happens to your collected assets?
(This article will not discuss the related and equally important medical and life continuation decisions.)
One would be surprised how many sophisticated and ‘newbie’ business people respond ‘no’. Which is not effective, efficient, or economical for them.
Why? Because if there is no advance planning, with supporting documents, probate cases – which are in-court lawsuits – can be time-consuming, expensive, and subject to procedural and evidence rules.
And further, the day after a business owner passes can be a great unknown. (Not counting grief.) Who will make decisions about company’s day-to-day affairs? Payments? Collections? Planning? And… continue customer, vendor, and regulator relationships.
That being the case, when I find out a business person does not have an estate or operational succession plan, I get to work on (1) educating them on why it is in their best interest to have both, (2) assisting them with developing those plans, and (3) actually implementing them.
For personal interests, we do that by having the Clients work with estate and tax planning colleagues to develop trust, wills, and related documents. And, as needed, to reallocate their assets into holding companies of a variety of forms.
For business purposes, we do that by having the Clients create internal plans regarding management succession, obtain ‘key person’ life insurance, and train appropriate management about those plans.
As with nearly all topics addressed in this series, those activities entail proactive risk management measures. It is, as has been argued throughout this series, simpler and less expensive to anticipate what can happen in advance based upon predictable circumstances, than it is to have to do the same ‘on the fly’.
No doubt these matters are uncomfortable to discuss – who wants to think about their passing – but they are best addressed long before they are needed. All from asking a question.
1 To learn the other four questions come visit with me. Or take one of my university courses.
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– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Warrington College of Business Administration and Levin College of Law and is the President-Elect of the Eighth Judicial Circuit Bar Association.
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