A business plan and starting a new company is an extremely exciting opportunity. However, you need to consider how your business structure at the outset influences your estate planning. If you have a business that has two owners, a traditional corporate format such as a limited liability company or a partnership may be the appropriate business structure. Both have advantages and disadvantages. If you want to minimize personal liability, or if you intend to sell shares to raise money from investors, you may need to pursue a corporate format.
If you want to operate with simpler taxation laws or with less formality, partnership may be appropriate. If you want to take the advantages of each of these and apply them to your business, you would select the LLC format. An LLC is often a flexible format both for business formation and estate planning because it allows two or more people to own the company to divide up gains as they are earned to determine how the company will be managed and to avoid the personal liability risks for problems with the company. The LLC’s assets are at risk for any judgments or debts entered against the company.
Any of the assets that you hold personally such as your investments, your home and your retirement savings are protected in the event of a lawsuit. Consulting with an experienced estate planning and business planning lawyer today is one of the most crucial steps that you can take to protect an asset that you have worked so hard to put together.