One Attorney for Your Business and Your Family
Most business owners have two lawyers who have never spoken to each other: the one who set up the LLC, and the one who wrote the will. Each did their job. Nobody checked whether the documents agree.
They often don't. The operating agreement restricts who can own your membership interest, but the trust assumes it can. The buy-sell agreement promises your partners a purchase your estate plan never mentions. The LLC was never retitled into the trust at all, so the business — often the family's largest asset — lands in probate while your family is trying to keep it running.
I practice business law and estate planning as one discipline. When the same attorney drafts your operating agreement, your buy-sell, and your trust, they agree with each other — because they were written to.
Where the Two Plans Contradict Each Other
These are the collisions I see most often when I review an owner's documents side by side:
The operating agreement blocks the trust.Many operating agreements restrict transfers of membership interests. If yours doesn't expressly permit a transfer to your revocable trust, the transfer your estate plan depends on may need consents nobody planned for.
The buy-sell and the trust disagree.A buy-sell agreement is a contract, and it generally controls over what your will or trust says about the same shares. If the two were drafted separately, your family can inherit an instruction the contract won't allow.
The business never made it into the trust. Even a well-drafted plan fails if the membership interest was never actually assigned. This is the business-owner version of the unfunded trust problem, and it's the most common issue of all.
What Happens Without a Coordinated Plan
If an owner dies with no coordination, the questions arrive immediately, and none of them have good default answers. Who can sign payroll this week? Who has authority to talk to the bank? Do the surviving partners have to accept your spouse as their new co-owner — or does your spouse have to accept whatever price the partners offer?
Probate can freeze the answers for months. A coordinated plan answers them in advance: the trust holds the interest so there is no probate, the operating agreement names who manages, and the buy-sell — if there are partners — sets the price and terms everyone already agreed to.
What Coordinated Planning Includes
For a business owner, my estate planning and business work run on one track: a review of your operating agreement so it permits trust ownership and names management succession; a properly assigned membership interest so the business is actually in the trust; a buy-sell agreement that matches the estate plan if you have partners; and a succession plan for who runs the company, not just who owns it.
One caution from experience: if your company is taxed as an S-corporation, trusts have to be handled with special care to protect the S election. It is exactly the kind of detail that falls through the crack between two separate lawyers.
This page is general educational information and is not legal advice for your specific situation. If you have questions about your own business or estate plan, please contact our office.
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