By Lane V. Erickson, Idaho Estate Planning Attorney
According to a report generated on March 28, 2019, on the website Small Business Trends (smallbiztrends.com) hundreds of thousands of new small businesses are started each year by individuals in the United States. Based on the National Associates of Small Business’s 2017 Economic Report, the majority of new small businesses are LLCs which comprise 35% followed by S corporations comprising 32% and then regular corporations equalling 19% then sole proprietorships which are 12% and finally basic Partnerships which comprise the last 2%.
The same report also contained statistics about the success rate for new businesses that were started. The report looked at businesses that began in the year 2014 and obtained statistics of the businesses that were able to continue on into subsequent years. From these statistics we could see that 80% of new businesses made it into the year 2015, 70% made it into the year 2016, 62% made it into the year 2017, 56% made it into the year 2018, and it is expected that about 44% of new businesses started in 2014 will make it into and through the year 2019. In other words, the success rate for small business is actually quite high.
The same statistics also reflect the trends that exist in Idaho when it comes to starting new businesses. Because there are so many individuals in Idaho that have new businesses, we include talking with our clients about their small businesses when we are discussing their personal estate planning.
At the Racine Law Firm, our premier Idaho estate planning attorneys have helped clients who own small businesses complete their own customized estate planning for more than 70 years. Based on our experience, knowledge, and the team approach we utilize with our estate planning attorneys, we are confident that we can help you too.
So what are the most important things that you should know about your own estate planning if you are the owner of a small business in Idaho? You should first understand the importance of your own estate planning documents. Additionally, you should understand how your corporate documents help control the transfer of your business assets to others after you pass away. Finally, you need to understand how getting help from a qualified estate planning attorney can help you in protecting your business and making sure that all of your assets, including your business, are protected and distributed to those you want to receive them after you are gone.
Your own Estate Planning DocumentsThe importance of your own personal estate planning documents in relationship to your small business cannot be overstated. A basic estate planning cludes a last will and testament, a durable power of attorney, that power of attorney for health care, and the living will. An estate plan could also include a trust or more than one trust. These documents play a role in the protection and operation of your small business while you are alive, and after you pass away.
For example, if you hold a durable power of attorney, and you suddenly become disabled and can no longer care for your business, your durable power of attorney document may name an individual who would have the authority and power to step into your shoes and control the operation of your business while you are alive. Additionally, if you utilize a trust your business operation may continue on into the future even after you have passed away. Without a trust, your last will and testament will most likely control who will receive your ownership interest in your business after you die.
It’s for these reasons that your estate planning documents are very important when it comes to your business. Because of this, if you have not yet completed your estate planning documents, and you are the owner of a business, you should seriously consider getting your estate planning documents done. Doing so protects both you and your business while you were alive, and gives you the opportunity to Think Through the transition of your business to others after you pass away.
Your Corporate DocumentsYour estate planning documents are not the only documents that are important. Your corporate documents are also very important when it comes to the continued operation of your business both while you are alive and after you pass away. For example, if your small business is operated through an LLC, you should have a well-thought-out and written Operating Agreement that is signed by all the owners of the LLC.
An Operating Agreement acts as a contract between all of the owners of the LLC. The Operating Agreement can spell out who will manage the business, what percentage of ownership each person has, how each of those owners can vote what it comes to the operation of the business, and more particularly, what happens to a person’s ownership interest in the LLC when they are either disabled or die. It’s for these reasons, that a well-written Operating Agreement is a vital part of your business and estate planning.
Similarly, if your small business is operated through an S corporation, you should have your corporate documents completed as well. These documents would include bylaws that would contain and describe the same information as an Operating Agreement for an LLC.
How an Attorney can HelpIt is virtually impossible for a web page to contain all the information necessary for a person to understand how their estate planning documents and their corporate documents can affect the operation of their a business both while they are alive and after they pass away. Additionally, a simple article can’t contain all the information that an attorney can provide to you when it comes to crafting your estate-planning, or your operating agreement or bylaws depending on the type of corporation that you have. Each of these documents is unique, and requires well-thought-out language based on your particular circumstances and needs. It’s for this reason that we always recommend that our clients seek help from a qualified estate planning or business law attorney to help them create these documents in a way that will benefit both them individually and their businesses as well.
We have assisted numerous clients with both their Estate Planning and their business documentation. We have the expertise in the knowledge necessary to answer questions and to help our clients make decisions that will be in their best interest. We are confident that we can answer your questions and help you too.
Enlist an Idaho Estate Planning Attorney to Help YouOur team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.