What Yogi Berra Can Teach Small Business Owners About Estate Planning
According to baseball legend Yogi Berra, “If you don’t know where you are going, you will probably end up somewhere else.” Yogi’s one liners often make me laugh, but they also make me think. His quip reminds me of the importance of having a plan when engaging in any endeavor that will impact our personal situations beyond the immediate here and now. That includes the process of estate planning. Now, I will grant you that Yogi probably wasn’t thinking about estate planning when he offered this particular slice of wisdom. Nonetheless, his words are absolutely spot-on insofar as the importance of planning for that day which we will not live to see. As important as having an estate plan is for all of us, it is of even greater importance for the small business owner. I think it is no exaggeration to say that thoughtful estate planning is an essential component of every small business owner’s overall business plan.
I think of a successful small business owner as someone who recognizes an opportunity to provide a needed product or service, and then invests the time, devotion and energy to developing and implementing a plan to seize that opportunity. I admire those thoughtful risk takers who harness their vision, business acumen and moxie in order to create, nurture and guide a sustainable business venture. I have found the small business owners I counsel to be thoughtful, deliberate and attentive to detail in how they go about the work of managing their businesses; i.e., they plan for the future. However, what I have also noticed from time to time in otherwise prudent and successful small business owners is a lack of any plan for their business when they die or are otherwise unavailable to manage it.
It is easy to understand how even successful small business owners who are otherwise consummate planners might prefer to avoid estate planning as it concerns their business operation. In at least one respect, these successful business owners are a lot like most people; that is, they are not accustomed (or inclined) to ponder their own mortality. It is a subject, even if not loaded with angst, which easily lends itself to defer consideration for “another day.” Yet, the stubborn reality remains that absolutely none of us will get out of this life alive. For the small business owner, Yogi’s wise counsel merits some thought, and action.
If you are a small business owner and have yet to start the estate planning process, let me suggest some relatively easy first steps to get you started. First, locate and then review your company’s organizational and governing documents. If your business is incorporated, these would include the corporate bylaws, shareholders’ agreements and those other documents your lawyers drafted when the business was getting started. If your business is a limited liability company or partnership, you will want to look at the company’s operating agreement or partnership agreement. Review these documents with the following questions in mind:
– How will your death (or permanent incapacity) affect the company’s existence?
– How will your successor be chosen, by whom and how much say do you presently have in that decision?
– Will your death trigger a buy/sell provision by which a co-owner, or the company itself, is allowed to purchase your interest in the business, notwithstanding the wishes of your own family members?
A brief review or discussion with your lawyer of questions like these may then prompt you to begin thinking about your vision for the company’s future when you are no longer able to guide it. A next step might be to consider how you would want the business operated in the event of your temporary incapacity or unavailability. A durable power of attorney will allow you (as the “principal”) to designate someone else (the “agent”) to make business decisions during your incapacity, while allowing you to retain the ability to withdraw or revoke the POA when you are ready to resume control of the business.