I love the entrepreneurial spirit that exists here in New Hampshire, and it can be seen in the broad variety of businesses we have across our state. With those different types of businesses come many different types of assets, some tangible and some intangible. This makes it critical to have a clear understanding how each can affect the value of your business and, ultimately, your estate.
Different Types of Assets
With equipment, for example, it is important to remember that if you are setting up an LLC and will be owning vehicles, make sure that those vehicles are titled in the name of the LLC. The whole idea of an LLC is to limit your liability, so if you are running an LLC and the only asset that LLC has is a bank account (because the vehicles are in your personal name), then you are undermining the process. I recently had the experience of having to liquidate a lot of vehicles – some owned by an LLC and others owned by the individual. By keeping good records on those vehicles and keeping it under one entity, it would have been a much easier process to sell them.
Ownership and Insurance
Another step in the estate planning process to be mindful of while setting up a business is to ensure everything is owned by the business, as this will only help to streamline things in the future. Insurance coverage is also incredibly important. It is a great idea to do an occasional insurance review to be sure that the amount of coverage you’re carrying is enough and that you have an umbrella policy or that you have enough liability coverage so that all vehicles in a fleet, for example, are properly insured. Simply making sure than your insurance coverage is ample and adequate will save a lot of heartache and hard times if anything ever does go wrong.
Rights, Royalties, and Intellectual Property
When it comes to things like royalties, those are their own category. Very often, especially with published works, royalties are governed by a separate contract. I’m currently working with a client who is trying to figure out how to leave their estate – they have no children and want to ensure that those royalty streams from ownership of intellectual property don’t die with them. There are some possible arrangements that can be made to put that royalty stream to good use and the companies that hold or issue royalties are actually pretty easy to work with if you already have this type of revenue stream in place. It can get complicated, however, when you have intellectual property ownership of a published work that you want to exploit, so this is something that should be carefully considered when naming your trustee executor. There are entities out there who specifically help authors and other creators like that, but it comes at a cost because they will probably want to own those rights.
Final Thoughts
Every asset, whether an intellectual property asset or a hard asset, can be sold. Ultimately, someone will need to sell off those assets for you, should you die before you liquidate your own business. If you are, for example, running a landscaping business and are thinking of passing it down to your children, you should make sure that you have a document in place that makes clear not just who will be buying the business, but also how you plan to transition the hard assets. As I always say: a good plan is so valuable because it can make so many of these things easier when the time comes.
