"You've done the work--now reap all, not just half, of the reward."
A Limited Liability Company (LLC) is like the Cinderella of the corporate world. Unlike its bratty, sometimes stubborn, step-sister, the Corporation, it has humble beginnings and comes with user friendliness that makes it a popular option for all types of business owners.
"Then what's the Problem?"
An LLC's primary appeal is its limited liability. Within a world of ambulance chasers, slip and falls, and first person to the courthouse wins, its never been more imperative to business owner, that if things go south, they're not going to be sued into oblivion. For what LLC's cost, its a small price to pay, for what you get in return. Peace of Mind. Also, TAX WRITE OFFS (someone cue the drooling sound).
THIS all sounds good, RIGHT--so what's the issue?
As great as LLC's are during your lifetime--they don't do VERY WELL after you die.
"LLC's and Probate!"
If you die without a Will, or you die with a Will, your estate is going through Probate (Court Administration of your Estate). If you are not familiar with Probate, some notable mentions are: probate is expensive (California has some of the most expensive probate costs in the country); probate is long (1-2 years on average); and probate is public (everyone will know what you left behind).
Thus, leaving an LLC to its own devices will end up costing you in the end.
"Putting your LLC into a Trust"
Putting your assets into a Living Trust means your estate SKIPS Probate. Most people know that BIG TICKET ITEMS like your house(s), bank accounts, life insurance, etc., can go into a trust, but did you know that everything from stocks, trademarks, and Yes LLCs can ALSO be included in your trust. Cool, right!? Not only does putting your LLC into a Trust make financial sense (bypass Probate) but it keeps things moving seamlessly after you die.
Example 1: No Trust
Let's pretend you've set up an LLC and things are PEACHY! You're doing well, the
business is doing well, etc. Sounds pretty good, right? BUT then one day, for one
reason or another, or no reason at all, you die! POOF--your gone.
What happens to your LLC?- Does it just run itself with no one at the control panel so
to speak?--how could it? Even a well drafted LLC has its limitations. The reality is
that one day your LLC will have to navigate the waters of its creator (YOU) dying!
Okay so we've established in this hypothetical that you've died. Now what?
Your LLC goes through Probate and your business potentially ruined!!
BUT HOW YOU ASK? Simple, legally no one (not your heirs, friends, etc.) can take
over your business until the Court has settled your estate. This means everything from
paying bills to entering into new contracts to applying for loans cannot be done, until
Probate is done. Think about it!--the court has to first appoint someone to administer
your estate, or if you have a will, this will be your executor (person tasked with carrying
out your last and final wishes) and then actually settle your estate. This could take years.
Can your business realistically wait years to pay bills, conduct business, and the like?
Example 2: With Trust
You've put your LLC into a Trust. Thus, when you die, the successor trustee (person
you've appointed via your trust) immediately and without hindrance, takes over.
He or she is now able to make sure your business continues to run as usual, without
incurring any penalties, judge liens, or the like. Pretty cool, right?
If you already created an LLC and have your business up and running, then you've done the hard work. No, really. In the grand scheme of things that's what most people struggle with, so congratulations, you've already done it. So, why not insure now that when you die, all your hard work does not die with you.
Get your LLC into a Living Trust and start resting easy my friend....you deserve it.
Until next time my legalites!!