Business owners need to plan the succession of their assets and business properly.
Oddly, a living will could play into some of that. According to a recent FindLaw survey, most Americans don't have a living will.
A living will is a document that spells out what your wishes are if you're still alive, but unable to speak for yourself.
This happens when you've been deemed incapacitated. When someone is incapacitated, they essentially have an inability to make a decision, or to enter into a legal contract.
In a small business, you would likely have a financial power of attorney to take care of your business needs. If you find yourself incapacitated, you should have a power of attorney giving someone else the ability to conduct your financial affairs. It sounds scary but if drafted well, it won't give anyone too much authority until the right moment, which is why you need to give power of attorney to someone you trust with your business.
But a living will is a bit different. It talks about your more personal wishes, such as life support and hospital stays. As such, you need to be able to give this power of attorney to someone you trust with your life. This might not be the same person you trust with your business.
The word "living will" is sometimes interchanged with "health care directive," or "health care power of attorney."
For business owners, a living will can lay out how your incapacity is determined. And the financial power of attorney can refer to the living will to see how incapacity is determined. The living will can propose which doctor deems you incapacitated, or it can create a panel that decides when you are incapacitated.
This is important for a business owner, especially if your business is a sole proprietorship, because your business is intrinsically tied to you and your well being. And often, your personal finances are tied to your business as well.
The lesson here: Estate planning is important for business owners.
Related Resources:
- 5 Things Everyone Should Know About Their Will (FindLaw's Law & Daily Life)
- How to Get Help With an Estate Plan (FindLaw's Law & Daily Life)
- What Is a Living Will? Compare These 2 Samples (FindLaw's Law & Daily Life)
