A friend, whom we’ll call Charlie, has assets in excess of $2,000,000, including his own business, a corporation of which he is the sole shareholder, director and officer. He asks, “If I die, what will happen to my business?”
If his estate is subject to probate, everything will be tied up for about a year.
His personal representative won’t even be officially appointed for at least six to eight weeks after the filing of a Petition for Probate. Meanwhile, the business decisions anyone makes will be without legal authority. No one will have standing to sign contracts. Unless someone has joint control of some of Charlie’s money, his bills will not get paid. There goes one business down the drain!
What can Charlie do to prevent that sad scenario? He can execute and fund a revocable living trust.
Nowadays, you can’t open the paper without finding an article or an invitation to a seminar about living trusts, and with good reason: The living trust is the basic building block of estate planning. A living trust can insure that Charlie’s wishes regarding the disposition of his Estate will be carried out. By titling all his assets properly, he can avoid probate, thereby saving thousands of dollars of fees and court costs and preserving privacy. As an added bonus, a living trust can provide for continuity of business management, and facilitate the transfer of assets to his beneficiaries, by giving Charlie’s Successor Trustee the power to run his business after his death.
What if Charlie were disabled? The living trust can also insure business continuity during his lifetime, by avoiding the necessity of expensive and burdensome conservatorship proceedings. Again, the Successor Trustee could step in and operate Charlie’s business during his disability.
Do you have your own business? What would happen to your business if you were disabled or died suddenly? Could the business survive? Would your wishes be carried out?
Depending on your particular situation, the revocable living trust may be a key to your peace of mind. Your attorney and your tax professional are in the best position to help you evaluate the advantages of estate planning in general and the use of a living trust in particular.
Jerry Kessler practices law in Santa Clarita. He can be reached at 661-255-1001.