A business owner loves their family and works hard for them. To give them a comfortable standard of life, they often establish and build a business growing it into a profitable venture. It is a family crisis when the business owner suddenly passes away or becomes unable to manage the business. Emotionally and often financially deprived, the family cannot decide what to do with the business and household finances.
As noted, a crisis may be due to sudden death, a health crisis, disability, or accident, so proper planning beforehand is crucial to set families up to cope with and handle this sort of tragedy. Following are the few legal plans that one should make to secure their family in a crisis.
Trust
The settlor creates a trust for beneficiaries. In a trust, the trustee is the one who holds the assets of the trust and manages them, while beneficiaries are the ones who benefit from the profit generated from the assets of the trust.
Beneficiaries may include a spouse, friend, children, or anyone declared by the settler, and the trustee may be a bank, financial institution, or individual. The trust is used during life or upon death by beneficiaries. There may be a dynasty trustee, which means it continues forever, and a trust can be either revocable or irrevocable. Irrevocable is a trust that cannot be changed, while the settlor can change revocable at any time.
Will
A will is generated during life and is applicable upon death. It is the document prepared by the property holder in which they declare to whom their assets will be distributed after their death and in which proportion.
There are a few types of property that do not come under a will. Non-probate property includes trust assets, jointly held property (joint tenants with right of survivorship (JTWROS), and life insurance. For a will to be valid, specific legal requirements of the local area must be fulfilled; otherwise, the will is not valid. For example, in a few states, it is required that a will be signed in the presence of two witnesses who are not related.
In intestate means, if a person dies without a will, the state has a default will. Default rules define to whom property and assets will be given after death.
Property Power of Attorney
A property power of attorney (POA) specifies the individual who may take control of your finances. It is designed during life when an individual cannot decide for themselves for various reasons. Forms of POA cover almost all categories of property and assets. The property which is not covered under POA can also be enlisted in these forms. An experienced and competent legal professional can be consulted for the most appropriate property power of attorney. Insurance, safety deposit boxes, business accounts, personal belongings, and real estate are covered under this designation.
Health Care Power of Attorney and Advanced Directives
A health agent is an individual who decides health-related issues in critical situations when you are unable to decide on your own. A trustworthy and responsible person is selected, and they are required in critical stages of health. A Health Care Power of Attorney form specifies who that individual is. That form is also known as “health care sudden emergencies and in long-term disease and designation,” “durable health care power of attorney,” and “health care proxy” in different states. This is effective during life and not upon death. This person must make the following decisions:
- When to be admitted into the hospital and when to discharge
- Which treatment or procedure is to be taken or refused
- Consent for the treatment
- When to withdraw life-sustaining treatment
Conclusion
Proactive planning for a business and loved ones should be done to secure their well-being when you can no longer care for them.
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