Article on Estate Planning for Social Entrepreneurs

Keven J. Stratton, Jr. recently published an Article entitled, Making Millennial Money Matter: Benefit Corporations and Their Role in Estate Planning for Social Entrepreneurs, 8 Est. Plan. & Community Prop. L.J., 553 (2016). Provided below is a summary of the Article:

According to a recent study published by Deloitte, millennials have much different expectations of business than did previous generations. When asked to choose words and phrases that most closely resembled their ideals of what business should accomplish, millennial respondents chose “job creation,” “profit generation,” and “improving society.” Additionally, in perhaps the most telling metric, 75% of millennials believe “businesses are too fixated on their own agendas and not focused enough on helping to improve society.”

These sentiments show that the next generation of clients for estate planners are increasingly concerned about the role of business in society. For small business owners, the largest part of their estate tends to be their business holdings. If the millennial generation’s trend toward businesses that do good for society continues, estate planners will see an increasing number of social entrepreneurs seeking estate plans. These social entrepreneurs and small business owners, will be looking to their advisors to recommend ways to align their investments with their worldview. Increasingly, estate planners will be called upon to design plans that pass on not only value to future generations, but preserve clients’ values for generations to come.

This comment discusses how a social entrepreneur’s social mission can be protected after the entrepreneur dies. To realize a social entrepreneur’s estate planning goals, estate planners need to understand what motivates these clients. Estate planners also need a basic understanding of a new type of business entity made available in the last five years that allows an entrepreneur to legally protect his or her social mission. To that end, this comment first defines who a social entrepreneur is and his or her special needs in estate planning. It will consider why traditional business structures are insufficient to address the protection of an entrepreneur’s social mission. Then, this comment will introduce the benefit corporation and how this entity can be used to protect an entrepreneur’s mission in an estate plan. Next, it will consider three different states’ requirements for benefit corporations and the advantages of each in estate planning. Finally, this comment will suggest specific strategies estate planners can employ to ensure their social entrepreneur clients’ missions continue after the entrepreneur dies.