Estate Planning for Business Owners

Business owners have many responsibilities and can often overlook the inclusion of their business in their estate plans. Many believe an estate plan only addresses family matters, such as real estate holdings, assets, personal possessions, and naming a potential guardian for their children. However, in the event of an owner’s incapacity or death, what happens to the business? Under such circumstances, the future of a business depends on two factors: the business structure and the existence of an estate or succession plan. 

Secure Your Business with Proactive Estate Planning

The death or incapacity of a business owner can lead to significant legal challenges. Hiring an estate planning attorney is a wise decision if you own a business. Proactive estate and succession planning is vital to safeguarding your business and loved ones. At Woodard & Ferguson, Attorneys at Law, we can help you develop a legally binding estate plan that allows you to control the future of your business, minimize tax liabilities, and protect your heirs and beneficiaries. 

Our Experienced Estate Planning Attorneys

Attorney David L. Ferguson has valuable experience as a former CEO of a multi-million-dollar business and understands how to protect your assets. Attorney Katherine F. Woodard has extensive experience with all aspects of estate planning, including businesses and professional practices. Together, they can handle any challenges you may face regarding estate planning for your business. 

Common Business Structures

  • Sole Proprietorship: Florida law views a business as inseparable from the owner in a sole proprietorship. The business ceases to exist upon the owner’s death, and its assets and liabilities become part of the owner’s estate. The business is liquidated, and the remaining assets are distributed to your beneficiaries after settling debts.
  • Partnerships: There are many types of partnerships, and similar to a sole proprietorship, the business interests are considered part of the owner’s personal assets. Upon a partner’s death, the future of the business depends on the formal agreement between one or more partners. If a buy-sell agreement exists, the surviving partners may purchase the deceased partner’s share of the business, allowing it to continue. The partnership and business are often dissolved and liquidated without such an agreement. 
  • Limited Liability Company (LLC): An LLC separates the business interests from the owner’s personal affairs. In a multi-member LLC, a solid operating agreement will specify what happens when an owner dies or becomes incapacitated. Without an operating agreement, the LLC may remain operational, with the owner’s share passing to their estate. However, the beneficiaries cannot take the decedent’s place as a managing member of the LLC.
  • Corporations: Multiple owners or shareholders may be involved when a business is structured as a corporation. Upon an owner’s death, the shares become part of the decedent’s estate and are distributed to the heirs or beneficiaries according to the estate plan. As new shareholders in the corporation, the heirs and beneficiaries may choose to sell their shares or become active members.

What is Succession Planning?

Succession planning is a long-term exit strategy that ensures the future of a business if the owner becomes incapacitated, retires, or passes away. A succession plan may be part of your will or trust, providing clear instructions for managing or dissolving an owner’s business after death. It also serves as a contingency mechanism for developing new leaders in a company, ensuring a smooth transition without operational disruption. 

A trust or will that include your succession plan ensures that your business assets or shares are distributed to the rightful heirs and beneficiaries. Without appropriate estate planning tools, the Florida intestate succession laws will govern the distribution of your assets or shares, which may not reflect your wishes. Family disputes and estate contests are likely without a legally sound estate and succession plan.

Legal Excellence in Estate Planning

To learn more about estate and succession planning, contact Woodard & Ferguson, Attorneys at Law, at (386) 677-0822 to schedule a consultation. Our dedicated legal team represents clients throughout the Ormond Beach and Daytona Beach, Florida areas and beyond. Let us develop a plan of action that will help you meet your business goals and bring you peace of mind.

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