As a business owner, your entrepreneurial journey is not just about building a successful venture; it’s also about creating a lasting legacy. You’ve worked hard to make a profitable business, and ensuring that it extends beyond your lifetime requires tactful estate planning. Every business owner’s estate planning journey will look different, but there are some tools that can help anyone protect their interests. Learning about powers of attorney and trusts can help you safeguard your business and secure its financial future.
Power of Attorney for Business
A Power of Attorney (POA) is a legal document that grants someone (the agent, or attorney-in-fact) the authority to act on your behalf in specific matters or situations. There are several variations of POAs that can be customized to fit your circumstances. A durable power of attorney is especially important for business purposes.
When a power of attorney is made “durable” it means that it stays in effect even if the principal is incapacitated. Like other POAs, the principal can appoint a trusted individual or group as agent(s) to make decisions or handle business affairs as outlined within the POA document. This is especially helpful if you’re unable to manage day-to-day business due to illness, injury, or extended periods of absence.
Key Benefits of a Durable Power of Attorney
As with all POA documents, a durable POA is very beneficial to people who want to make sure things continue running smoothly without them. In the context of a business, you have the flexibility to define the exact scope of the agent’s authority, so you won’t have to worry about major changes without your say. You’ll be able to maintain control over vital business decisions even when you’re unable to be present.
Trusts for Business Succession
A trust is a legal arrangement in which a grantor enables a trustee to hold and manage assets on behalf of beneficiaries. Trusts are versatile estate planning tools that can be adapted to serve various purposes. They’re commonly used to protect your assets like life insurance policies, real estate property, or manage charitable contributions. Many families utilize them to facilitate business succession.
A “revocable living trust” is a popular option for business owners seeking to secure the future of their business while maintaining control during their lifetime. In this type of trust, the business owner can serve as both the grantor (creator of the trust) and the initial trustee (manager of the trust assets). As the grantor and initial trustee, you retain full control over the trust assets and can continue to manage the business as usual.
Much like a POA, the trust document should clearly outline the plan for business succession after the grantor’s incapacity or passing. The successor trustee, who could be a family member or business partner, can then step in to manage the business in accordance with the grantor’s wishes.
Key Benefits of Trust for Business Succession
One of the greatest benefits of utilizing a trust as part of your business succession plan is that it can pass on to beneficiaries privately and without the need for the time-consuming and often expensive probate process. Predetermining succession will allow a smooth transition of ownership which will enable the business to continue running effectively. The trust may also provide asset protection that shields the business from potential debts and liabilities.
Creating a Plan That Works for You
Proper estate planning is not only about protecting your personal assets but also safeguarding the future of your business. Although everyone can benefit from a comprehensive estate plan that takes all factors into consideration, as a business owner, there are many additional risks that could impact your estate. The team at Zamora Hillman & Villavicencio Attorneys at Law, is here to help you tailor your estate plan to protect what matters to you most. To start your journey toward leaving a lasting legacy, call our office at (305) 285-0285.
Zamora, Hillman & Villavicencio
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