You might be one of many Florida residents who own one or several companies. Perhaps you took the reins of a family establishment that has been operating for decades. On the other hand, maybe you are an entrepreneur who had a dream and made it a reality. Either way, it’s never too soon to think about the future. Now is the time (if you haven’t already done so) to implement a business succession plan as part of the estate planning process.
There are key factors to keep in mind to ensure a solid business succession plan. One of the benefits of the estate planning process is that you can customize a plan to fit your unique needs and goals. While it’s possible to create your own plan, it’s always best (especially for business owners) to seek guidance from an experienced resource. This helps you avoid legal problems and ensure execution of the plans for your business when the time comes to administer your estate.
What type of business succession do you have in mind?
One of the first decisions to make regarding business succession is what type of plan you have in mind. Do you want your business to stay in the family? If so, do you have adult children or other relatives in mind who are willing to carry the torch? Another option is to incorporate a buy/sell clause as part of your estate plan.
If you want to sell your business when you die, it’s important to stay updated with valuations, so that the current fair market value of the business is on record. There doesn’t have to be a limit on your buy/sell plan to occur solely upon your death. You can also include instructions for such a plan to take effect if you become incapacitated or officially retire.
Discuss your estate planning ideas with your family
You’d be surprised how many people make the mistake of implementing a business succession plan as part of an estate plan without discussing it with family members designated to play key roles in the future of the business. Transferring business ownershipand operations is not something to do “as a surprise.” You’ll want to discuss your plans with all family members to whom the plans are relevant.
Make sure that those for whom you wish to set aside specific roles are willing to accept the responsibility. Avoid making assumptions. For example, you might have an adult child in mind as future owner of your company, but he or she might not want to accept the role. The same goes for non-family members who you might have in mind as part of your business succession plan. It’s also wise to have an experienced legal representative periodically review your estate plan to make changes or updates as needed.