All About Estates

Small Business Estate Planning: Choosing Estate Trustees

The small business owner’s choice of estate trustees is very important to the successful administration of his or her estate and succession of his or her small business.  Many factors should be considered when such a choice is being made.

First, although not a necessity, it may be important for the small business owner to choose estate trustees who have sufficient business experience or acumen to deal with the small business in an effective and competent manner.  In the case of a private corporation controlled by the testatrix, it will be the estate trustees who will have voting shares to elect the board of directors and therefore it will be these persons who will have control of the corporation after the death of the testatrix.  Therefore, it may be important to have some relevant business experience among the estate trustees undertaking this task.  In the event that the small business undertaken by the testator is extremely specialized, such as the collection and selling of fine art and antiques, such business experience may be of particular importance.

Second, it is also important to ensure that the estate trustees chosen to deal with the small business assets have the ability to work together relatively smoothly and easily. In the event that the testator wishes to appoint his children as estate trustees but is hesitant as to their ability to work together in a harmonious fashion, it may be prudent to appoint a relatively neutral third party trustee, and to give that third party trustee a veto power, in order to ensure that a deadlock between or among the children can never frustrate the orderly and effective administration of the estate and succession of the small business. Other more complex estate and succession planning solutions and corporate reorganization structures can also provide some assistance to second or third generations of a family.

Third, in the case of an estate plan where a spouse of the testatrix has a life interest and the children of the testatrix have a remainder interest in small business assets, it is important to ensure that the inherent conflict of interest between the spouse and the children, as the life tenant and remainder beneficiaries, are considered by the testatrix when she chooses the trustees of these trusts. 


Laura West

About Laura West