Estate Planning for Small Business Owners
If you own a business, you know what it’s like to sacrifice your time and energy to build your company. You’ve worked hard to create an successful business and source of income for you and your family. What will happen to your Florida small business upon your death? Having a business estate plan can mean the difference between chaos or relative calm regarding your business after you’re gone.
Create Your Will
The first step is to create a will. We cannot overemphasize the importance of having a will, especially if you own your own business. In your will, you can specify who will receive your personal assets upon your death.
You can also decide who will become the personal representative of your estate. The personal representative will step into your shoes as the owner of the business during the period of estate administration. He or she is the person who can follows your instructions as to who should be in charge of the continuation of your business. Naming someone you trust to act as the decision maker will ease the transition for your employees, partners, and the company itself.
Outline Your Basic Succession Plan
A succession plan ensures that your business can continue after your death. In this plan, you can choose decision makers, create a strategy that will allow for the transferring of crucial information. The U.S. Small Business Administration notes that approximately 70% of small business owners lack any type of real succession plan.
When drafting your succession plan, ask yourself who will be able to keep the business true to your values. Should you require your appointed successor to stick to a buy-sell agreement? What must the successor do to keep the business successfully running? Do not leave these decisions to chance; write them out in a detailed succession plan.
Make Sure You Have a Life Insurance Policy
Many small businesses do not have significant liquid cash assets. If the owner dies, the successor may not have the needed cash on hand to continue operating the business. You as a business owner can actually take out life insurance policies that name your partner or your known successor as the beneficiary.
The proceeds of your life insurance policy are potentially tax-free and can be used by the remaining partners to buy the shares of the business owner who has passed away. If you own a family business and your business will pass down to your spouse or another family member, a life insurance policy is essential. The liquid assets will give your spouse or family member a buffer while he or she figures out how to go forward running the business.
Let Us Help You Today
If you need to set up an estate plan as a Florida business owner, please contact the experienced St. Petersburg estate planning attorneys at Legacy Protection Lawyers, LLP to set up your appointment today. We are eager to assist you in any way we can.