Your estate plan isn't a succession plan

An estate plan answers who gets your business. A succession plan answers what happens to it on Monday morning.

What an estate plan covers

Your will or trust names who inherits your interest. If the interest is in a trust, it can pass without probate. Can a trust own your LLC?

What it doesn't

• Who manages the company. Inheriting an LLC interest may give someone your share of the profits without the right to vote or manage, depending on the operating agreement.

• Who can sign. Banks, clients, and vendors need someone with authority on day one, not after a court appoints a representative.

• What it's worth. Without a valuation method, heirs and surviving partners argue.

• What your partners must do. Buy out your heirs, accept them as members, or neither.

• Licenses. A professional practice may not be ownable by heirs who aren't licensed. If you hold a professional license, plan for this.

Where the answers go

In the operating agreement: who manages if you can't, how your interest is valued, whether the company or the other members must or may buy it, and how they pay. Insurance often funds the buyout.

Incapacity is the likelier problem

Death gets the attention. An illness or accident that keeps you out for six months is likelier, and a will does nothing for it. What happens to your business if you can't run it tomorrow covers that side.

What to do

Make sure your estate plan and your operating agreement name the same people and say the same thing about your interest. Then write down where the accounts, passwords, and contracts are. Document review and revision covers the operating agreement side.

This is general information, not legal advice for your situation. If you want an answer for your business, book a consultation.