Incapacity isn’t just about catastrophic accidents or permanent disability. It can be temporary. It can come in the form of a long recovery after surgery, a cancer diagnosis that takes you out of the office for months, or even an extended leave to take care of a family emergency. The bottom line is this: if you can’t be there, your business still needs to function.

The Real Risk of No Plan

As a business owner, you wear a lot of hats. You oversee operations, make the big decisions, manage key relationships, and keep the business financially afloat. So what happens when you suddenly can’t be in the office for an extended period?

Without a clear incapacity plan, the absence of leadership can create confusion—and fast. Employees might not know who’s in charge. Decisions could be delayed or made by the wrong people. Worse, family members involved in the business may assume they should step in, even if they’re not the best fit.

A lack of structure during your absence can lead to internal power struggles, operational breakdowns, and even financial loss.

What Incapacity Planning Looks Like

Incapacity planning is an extension of good estate planning. It’s about protecting your business during your lifetime—not just after you’re gone.

Here’s what a solid incapacity plan should include:

A designated decision-maker: Someone who knows the business, commands respect, and can make tough calls when you’re unavailable.

Clear communication: If your family works with you, set expectations early. Being related doesn’t automatically make someone the best person to lead.

Legal authority: Make sure your chosen backup has the legal power to act on your behalf—this often includes creating a durable power of attorney or incorporating provisions into your business operating agreement.

Operational systems: Document key processes, vendor contacts, passwords, and protocols. If you’re out, someone needs to step in seamlessly.

Why Family Isn’t Always the Best Fit

Many business owners assume a spouse, sibling, or child will take the reins if something happens. But that assumption can be risky. Family members may not have the right experience, temperament, or relationships to lead the business effectively. And assuming they’ll step up—or that others will accept them in the role—can cause unnecessary tension or confusion.

Choosing the right person means thinking about what your business actually needs to stay stable in your absence, not just who’s closest to you.

Build a Plan Before You Need One

At the end of the day, estate planning isn’t just about preparing for death—it’s about protecting what you’ve built during your lifetime. For business owners, that means thinking beyond succession and addressing incapacity head-on.

If you haven’t created a plan for who leads your business when you can’t, now is the time. We can help you identify the right person, create the necessary legal documents, and build a plan that protects your employees, your income, and your peace of mind.

Consulting with professionals who understand business operations when estate planning will provide peace of mind, knowing that your legacy is secure and your wishes will be honored.  Therefore, see an attorney with business and estate planning experience.  They should be able to work with you, your financial planning team and accountant to create the best plan.

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Lawyers across the country are sending notice to their clients that they, along with millions of other business owners in the country, are now required to submit Beneficial Ownership Information (BOI) to FinCEN’s new database.

Beneficial Ownership Information (BOI) for the entity will include the entity’s name, address and tax identification number.  BOI for each owner in the entity will include the owner’s name, current residential address, date of birth, either driver’s license or passport number, and a copy of the current driver’s license or passport with a clear picture of the person.  The disclosure requirements for owners only apply to individuals that excercise substantial constrol over the entity, or who own at least 25% of the entity.  After submitting this BOI in an intial report, the entity will need to update the report anytime provided information changes (like an address).

The deadline to submit BOI to FinCEN depends on when the entity was formed.  Entities formed after January 1, 2024, must submit complete information within 90 days of the formation date.  Entities formed before January 1, 2024, must submit complete information by January 1, 2025.

Failure to comply with the CTA can result in civil penalties up to $10,000.00 and/or up to 2 years imprisonment.

This law represents a dramatic change for business owners.  You will likely have questions.  The best source for information is FinCEN’s frequently asked questions page www.fincen.gov/boi-faqs and FinCEN’s Small Business Compliance Guidewww.fincen.gov/boi/small-entity-compliance-guide.  FinCEN is still making adjustments to its requirements, so their official FA page is the best place to get the most current guidance.

As a policy, most law firms will not upload BOI on behalf of clients.  FinCEN has designed an online portal to submit information quickly and conveniently, see www.boiefiling.fincen.gov.  The portal is designed well enough for non-attorneys to submit their information without difficulty.

If you do not wish to submit the BOI reports yourself, my recommendation is to use a corporate service or registered agent service company.  PLEASE BE AWARE THAT THERE ARE MANY COMPANIES OFFERING TO SUBMIT BOI REPORTS AND SOME OF THEM ARE FRAUDULENT SCHEMES TO STEAL YOUR PERSONAL INFORMATION.  Therefore, it is recommended that you use only companies with an established record of providing corporate services.

As with any legal matter, if you have questions regarding the Corporate Transparency Act, you should consult an attorney familiar with business entity law.

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A partnership is an association of two or more persons to carry on as owners of a business for profit.  What does “carry on” mean?  It is the operation as an ongoing business.  The partnership does not have to actually make a profit and if it does the profits do not have to be equally shared.  However, the partnership must have an agreement to share profits to be valid.  If there is no such agreement, then no partnership.  The partners making up the partnership can be secret, silent or dormant partners.  A secret partner actively participates in the partnership affairs, but his association is generally unknown.  A silent partner is one whose status as a partner is generally and publicly known but does not participate in the management of partnership affairs.  A dormant partner is one whose association with the partnership is generally unknown & who takes no part in the management of partnership affairs.

There is no specific format or formalities that are necessary in order to create a partnership and it may be created without any form of written instrument.  While no written instrument is required you may have one.  The partnership relationship is highly fiduciary in nature.  The partners dealings with each other are subject to the same scrutiny and imputations as transactions with any ordinary trustee/beneficiary relationship. This requires the utmost degree of good faith and fair dealing.

Generally, a partner is not entitled to compensation (i.e., a salary) for his services to the partnership, no matter how valuable his services may be.  Compensation comes instead from their share of the profits.

The general rule on liability is that every partner is an agent of the partnership for the purposes of its business and the act of every partner.  All partners are jointly and severally liable for the actions and debts of the partnership.  Any person not a member of the partnership may hold the partnership liable for any loss, injury or penalty resulting from where a partner commits any wrongful act or commission.  Additionally, once the partnership assets are depleted in payment of its debts, the personal estates of the partners may be looked at for satisfaction of the partnership’s obligations.   When one partner dies in a two-person partnership, this ends the partnership.  This can leave a dilemma if the partnership owns real estate or debts.   Furthermore, there are certain actions that require agreement between all of the partners to be valid.  As with any rule there are exceptions to this.

Next week I will discuss and describe some of the aspects of a corporation and why that might be the choice of your business entity.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C.  He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.

The post What is the Difference Between a Partnership and Corporation? Part 1 appeared first on Moak & Moak, P.C. -Attorneys At Law.

A few examples give you the idea:

• Can you make yourself pull the trigger on an important decision?

• Do you see competition as exciting or just stress-inducing?

• Are you willing and able to plan ahead?

• Do you like interacting with people you don’t know?

• Do you have the perseverance, not to mention the physical stamina and health, to put in long hours if that’s what is needed to make the business succeed?

• Are you, and anyone else financially dependent on you, prepared to risk your savings in pursuit of the business dream if that’s what it takes?

• Unless you are planning a one-man band of a business, are you comfortable with hiring, supervising, and possibly having to fire other people?

• Are you reasonably well organized?

• Do you know anything about the paperwork and legal side of running a business, such as payroll and accounting, the permits or licenses you will need, or the regulations and laws that may apply to the business?

Turning the idea into bricks and mortar (literally or figuratively) involves a lot of decisions, some of which are best made only after getting professional advice.

See more tips here

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