Essential estate planning documents for entrepreneurs

Illinois residents who operate their own businesses may want to know of different estate planning documents they should have on hand. Even though they may be focused on the success of their company, it is important to have plans in place in the event they are suddenly unable to operate their business because of sickness or death. Not having a plan can jeopardize the livelihood of their employees and coworkers.

A will is a simple estate planning document that allows testators to direct the distribution of their assets. Testators are also able to specify who they want to be manage or disburse the assets in the will.

A power of attorney authorizes an individual specified by the entrepreneur to make decisions regarding the business if the entrepreneur is incapacitated. If a power of attorney is not in place, a guardian might be appointed by a court, and the choice may not be in line with the owner's preferences and can result in conflict with other affected parties.

An entrepreneur can use a revocable living trust which gives the trustee the ability to manage the assets if the settlor becomes incapacitated. This type of estate planning document can be modified by the settlor to accommodate current circumstances and does not have to undergo probate. For businesses with multiple owners or partners, a buy-sell agreement is essential. It allows an owner's interest to be transferred upon death or disability.

Owners of all types of business entities should start considering these and other documents as soon as possible. A buy-sell agreement is particularly crucial, and an attorney who has experience in advising startups can be of assistance in its preparation.

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