If you own your own business, you are up to your ears in day-to-day operations, supporting your employees, communicating with your vendors and contractors, and, of course, doing your core work of providing services to your clients.
If you are a doctor, lawyer, or therapist the way your clients count on you, your expertise, and your practice are amplified.
What happens if you lose capacity?
- Who is authorized to run payroll, notify your clients, and complete the work they have paid you for?
- For lawyers, doctors, and therapists, there is an additional layer of complexity because we cannot allow lay people to view our client files.
The same is true when you die.
- Even if you have assigned your ownership interest in your practice to your revocable trust, is your named successor qualified to operate, close down, or sell your practice? To do these things, they need access to your files.
What is the answer?
- If you are a lawyer like me, you can marry another lawyer and appoint them as your agent or successor! But this is not the case for most people.
- A better approach is to have power of attorney and a revocable trust that contains the right provisions to allow your most trusted person to appoint an ancillary trustee(s) who can do this important work.
Five Estate Planning Steps Every Doctor, Lawyer, and Therapist Must Do
- Work with an attorney to create your entity (LLC or Corporation). Do not do this with your CPA, a paralegal, or online. This is particularly important if you want asset protection. If you feel that you need support in this area, contact me, and I will refer you to an attorney who understands your business.
- You must have a yearly maintenance plan for your entity. California and your county all have filing requirements, and with the new Corporate Transparency Act, there is even more paperwork and even more potential exposure to expensive penalties.
- Your trust should specifically name your business, and your corporate attorney and estate planning attorney should collaborate to ensure the documents work together properly.
- If you are in business with others, every owner of the business must have an up-to-date estate plan and the estate planning attorney and your corporate counsel should collaborate on the right language.
- To avoid probate, you must transfer your ownership interest in your business to your revocable trust. Simply having the trust is not enough. Your business lawyer can do this work for you.