- February 13, 2020
- Posted by: AnnaMarie L.
- Category: Tax
According to the Small Business Administration (SBA), there are 2.5 million small businesses in the state of Florida alone. Most small firms are heavily dependent on the day-to-day contribution of their owner(s). As a small business owner, your estate plan should protect you, your loved ones, and the viability of your company. Here are five estate planning tips that you can use:
- Know Your Objectives
Estate planning requires a careful assessment of your own objectives. You need to figure out the best long-term path for your business. Do you want to sell it and use the proceeds to provide for your loved ones? Do you want to facilitate the transition to your child or another family member? Regardless, you will only be able to craft an effective estate plan when you have clarified your goals.
- Write a Will, but Consider a Trust
Every adult should have a will—it is the document that helps lay the foundation of an estate plan. That being said, a will is not always the best way to handle business interests. Florida’s probate process can be complicated. Fortunately, there are options that can help you business avoid probate altogether. As an example, a Florida estate planning lawyer can help you put a revocable living trust in place to transfer business ownership to your heirs.
- You Need a Comprehensive Business Succession Plan
Perhaps the biggest estate planning error that small business owners make is failing to put a comprehensive business succession plan in place. Without one, a company may struggle to survive, let alone thrive, through the transition. A business succession plan should contain a clear process for selecting a successor, formalized training procedures, and detailed instructions for how everything should be carried out.
- You Might Need a Buy-Sell Agreement
If you are a sole proprietor, transferring ownership may not be especially complicated. However, if you are a member of a partnership or you own a significant, non-majority stake in a small business, a buy sell agreement may be useful.
As described by Forbes Magazine, buy sell agreements stipulate how a partner’s shares in the company will be handled if they pass away or otherwise leave the business. Most often, if gives the other business partner(s) an opportunity to purchase their shares. These agreements can help to avoid the nasty disputes that have the potential to destroy the value of a small business.
- Make Sure All Documents and Records are Organized
Finally, your estate plan should include all of the information that your successor will need to carry out your wishes. When documents and records are not well-organized, it can create serious problems. Customer accounts may be mismanaged, creditors may go unpaid, and financial assets may simply be lost. Organization should be a key part of any small business owner’s estate plan.
Contact Our Sarasota, FL Estate Planning Attorneys for Immediate Assistance
If you are a business owner who has questions about estate planning, we are here to help. To set up a strictly confidential initial consultation, please do not hesitate to contact our law firm today at (866) 829-3367. With a law office in Sarasota, we serve communities throughout Southwest Florida, including in Manatee County, Hardee County, De Soto County, and Charlotte County.