One of the most powerful truths I have learned in working with family owned businesses, is that the world of entrepreneurialism moves at a very rapid pace. I have not worked as an employee of a company for 20 years, but my recollection is that being an employee was a more forgiving place, at times with little sense of urgency. Those workers with an “employee mind-set” were more concerned with making sure they got their ½ hour lunch breaks, 15 minute breaks every 4 hours, and punching the clock right on time. The world of entrepreneurs doesn’t work that way. It’s 24 hours a day, 7 days a week, 365 days a year. There’s a reason entrepreneurs are referred to as “movers and shakers.” They eat, sleep, and breathe their business.
They are always on the move and always involved in making a deal happen. This is another reason we often recommend the use of revocable trusts in these environments – for the continuity of asset management. As an example, let’s say a business owner is involved in a strategic acquisition or sale of a piece of real estate or another operating business. During the process he becomes disabled or, even worse, dies. Under such circumstances, this deal would come under the purview of the probate court and subject to a judge’s decision, or guardianship, and often a long and delayed process. Further a guardianship environment requires bonding, which can often be difficult to acquire. Consequently, the deal this business owner has been working on is likely to fall apart; that is, unless he has made effective use of a revocable trust. With a revocable trust, a successor trustee is named and this successor trustee simply takes over getting the deal done.
Further, when a business owner has made distributive provisions through his will (as opposed to a revocable trust) for his assets, it’s important to note that these assets will not be under management or be distributed according to his wishes, until the estate is settled. The estate settlement process can, and often does, take years to complete. When a small business becomes subject to the hassles of a guardianship environment or probate, the viability of the business can be threatened.