An Estate Plan is Part of a Good Business Plan

| Probate & Trust

By:  Michael R. Demerath, Attorney at Hager, Dewick & Zuengler, S.C.

As a business owner, you know that the day-to-day activities and long-term goals of your business need to be constantly attended to in order to allow your business to maintain and grow its value.  A few days missed results in emails, orders, emergencies and issues pilling up, unless you have given someone else the authority to handle these matters in your absence.  What if you haven’t given someone else this authority?  What would happen to your business?  Most owners think of this issue when they look to take a family vacation, but an owner should also take steps to deal with this issue in context of an involuntary leave of absence due to illness, incapacity or death.  Estate Planning Documents such as Powers of Attorney and Revocable Trusts can help provide business owners peace of mind in knowing that the business, which they have worked so hard to build, can continue to operate and benefit their family, even if the owner is unable to be involved.


A Durable or Financial Power of Attorney allows you to appoint a person to handle your financial affairs while you are alive.  The Power of Attorney can be effective immediately or only upon your incapacity, whichever you desire.  The powers granted to that person include, among other things, the power to continue or participate in the operation of your business, to consent to the sale of the assets of or interests in the business, to vote your interests in the business, and generally represent you in all business matters.  In conjunction with the Power of Attorney, documents and agreements of the business may also need to be reviewed and revised to allow for action by the Power of Attorney.  There are certain decisions and documents which only the owner can execute, and some will be time sensitive.  If you do not have a Power of Attorney, no one would have authority to act for you, and guardianship court proceedings would need to be commenced to appoint a guardian to act on your behalf.  The delays caused by the court proceeding could result in damage to and missed opportunities for your business.


A Revocable Trust is another estate planning tool which can greatly benefit a business owner for a number of reasons.  By setting up a Revocable Trust and transferring your ownership interest into it, you still maintain control of the business and, while you are still able to act you, as Trustee, make the decisions.  Should you become unable to act, whether due to injury, incompetency or death, a Successor Trustee is immediately able to step into your place and continue to operate the business.  This allows for the avoidance of delays related to the appointment a guardian while you are alive or a Personal Representative after your death.  If a Revocable Trust is not in place, upon your death the disposition of your assets would be governed by a Last Will and Testament or the laws of the State of Wisconsin in a Probate, and a Personal Representative will need to be appointed to handle the Probate.  Depending on who needs to receive notice of the Probate proceeding, the appointment of a Personal Representative could result take weeks or months.


An additional benefit of holding your business interest within a Revocable Trust is the avoidance of the need to publically disclose the value of your business.  As a part of a Probate, an Inventory needs to be filed, and it will need to set forth the value of your business.  A copy of the Inventory will be available at the Register in Probate’s office for anyone to review, which could seriously hurt attempts to negotiate with multiple parties regarding the sale of the business and the financial benefits your family could receive.


While it may be hard as a business owner to step back and think about who would take over if you were unable to act, having these discussions with your family and advisors and putting the appropriate documents in place is an important step to help protect what you have built.  The person or persons you choose to act as your Power of Attorney or Successor Trustee is completely your choice.  It may be a spouse that has watched you work day in and day out to build the business, and knows how you think about business decisions.  It could be a child that, among other things, is part of the business.  You know your business best and the decision is yours, as long as you take action now to put the above described documents, along with other customary estate planning documents, in place to help protect your business and your family.