An estate plan can accomplish many things, but at its heart is the goal to insure that your property is passed on to the next generation in a way that respects your wishes and your hopes for your heirs. This goal is important for all kinds of property, including financial assets, real estate and thing of mostly sentimental value, but when one of your assets is your family business, it can take on a special urgency.
People who own a small business should consider making succession planning part of their estate plans. These tasks can require working with multiple attorneys, or with a firm that has experience in estate planning, tax law and business law.
Make sure the business goes to someone who wants it
Florida law presumes that all your assets should go to your family members after you pass away. Without a valid will instructing otherwise, a probate court will divide and distribute your assets according to predetermined guidelines under the state’s law of intestate succession. If your business is part of your assets, it goes into the pile of assets and liabilities that is known as your estate.
It can take a long time for probate courts to work through these cases, causing a lot of stress for your family and uncertainty for your business. What’s more, the cost of the probate process comes out of your estate, meaning there will be less of your estate to distribute to your heirs when the process is complete.
Estate planning provides various ways to avoid or minimize the pitfalls of probate for your family. To protect your business, make sure it has a succession plan in place so that it will be able to keep going when you are gone. If you want to pass the business on to your family members, make your wishes clear and give your wishes legal force by putting them in your will.
When you own a family business, it can be very difficult to keep your work life and your business life separate. This is true for your estate, as well. Remember that when you decide your daughter should inherit your business, this means she takes over your business responsibilities, and may face some heavy tax consequences, as well. This situation can also cause some resentment if it means you end up leaving a less valuable inheritance to your other child.
The picture becomes even more complicated if you are co-owner of your business. Many business owners work out a succession plan whereby the other owners can buy out the share of a family member who inherits part ownership of the company.