Q: How can my wife continue our business if I die as a sole proprietor?

A: There are a number of ways a person can take over another person's business, including through a Trust or Will, by incorporating or forming an LLC and having specific language in the legal documents, etc. The law in California is that anyone with "probatable" assets valued at more than $184,500 has three choices: (1) do no estate planning and your loved ones are required to go through a lengthy court process in Probate Court BEFORE they inherit most assets; (2) set up a Will and your loved ones STILL go through probate; or (3) have a Trust and your loved ones avoid probate so long as the assets are placed in the Trust. "Probatable" assets are those that are required by law to go through the probate process if not in a Trust or handled in another manner. Estate planning is not an area of law I recommend anyone try to handle themselves because there are plain English words that are also terms of art with very specific legal meanings. So, when someone writes their own estate plan, they often intend one thing, but the outcome is different due to the words the person used. Best wishes!

A: As a sole proprietor, all of your business assets are your assets. There is no separate entity. At a minimum you need a will that leaves your business assets (or everything you own, if that is your desire) to your wife when you die. But you should seriously consider creating a revocable living trust instead in order to avoid probate. Probate is crazy expensive and unnecessarily complicated in California. Trust administration is typically orders of magnitude cheaper and easier than probate.

A: As an additional note, people often have a misconception of what a power of attorney conveys and that it ends upon death.

A: Creating a clear succession plan for your business is crucial since sole proprietorships legally terminate upon the owner's death. While power of attorney is helpful during your lifetime, it becomes void after death, so you'll need more comprehensive arrangements to ensure a smooth transition.

First, complete your will as soon as possible, explicitly stating your intention for your wife to inherit the business assets and operations. Consider transitioning your business structure to an LLC or corporation, which can continue regardless of your status and provide tax benefits and liability protection. Create detailed documentation of all business operations, including client contacts, vendor relationships, passwords, and operational procedures so your wife can step in without missing critical information.

Additionally, establish a living trust that can immediately transfer business assets without probate delays. Make sure your wife has authorized access to all business accounts and knows your key professional contacts like accountants and lawyers. Consider obtaining life insurance with your wife as beneficiary to provide financial stability during the transition period and cover any potential business debts that might otherwise become her personal responsibility. These preparations will help ensure your business legacy continues smoothly under her guidance.