Many people consider probate to be a four-letter word. This feeling is understandable, as the probate process in Florida is often lengthy, costly, and stressful. Despite the general negativity surrounding having an estate pass through probate, proper estate planning, which can prevent probate or make it much simpler, is rare. A whopping 67% of Americans have no estate plan, and that number is even higher for people of color.
Why do so few people take the time to plan for their estate and their loved ones? It can be attributed to a laundry list of reasons. Often, people think they have plenty of time to get around to it. Other reasons include the often-incorrect assumption that they don’t need one because they don’t own significant assets and because they aren’t sure how to get started.
If you’ve been avoiding estate planning, regardless of your reasons, now’s the time to do it. Estate plans are especially important for business owners because there are additional considerations when business succession plans are thrown into the mix. As a business owner, you may have been asking yourself, “What happens to my business when I die?” The answer often depends on what steps you take now.
Business Succession Planning
A business succession plan is a strategy businesses can use to plot out how their company will function in the future or who will take over ownership when the current owner dies. These plans are important for both the health and operation of the business and for the owner’s family and loved ones who may be responsible for company roles. You want what’s best for your business and your family, and creating a business succession plan can accomplish both simultaneously.
A solid business succession plan should be able to account for scenarios in which you, the owner, can no longer serve as owner. Your plan should name the heirs or beneficiaries you want to have ownership of your business and discuss what duties each person will have within the structure of the company. There should also be details about the sale of the company if needed, and how the proceeds will be distributed amongst beneficiaries.
Making this plan for your company is important because assets and debts pass through probate when you die, and since business ownership is considered an asset, your company may also end up subject to Florida probate laws that dictate who receives your property. Without a comprehensive plan, your assets, including your business ownership, could be distributed to your heirs based on intestate succession laws rather than your own personal wishes.
Florida Intestate Succession
When someone dies without a will or estate plan in place, their estate is known as intestate, and any assets or property they held will likely be dealt with based on Florida intestate laws. This is not the best-case scenario for a few reasons. Intestacy can be a more challenging probate process. Without a clear roadmap from the decedent (the person who died), the court will have ultimate decision-making power. Also, property can only pass to family members according to intestate succession laws, which leaves out people like friends and distant relatives.
When naming a business successor, the court will base its decision on these intestate laws, not on who would be the best person to take over the company. The way property passes to heirs is complex, but the general hierarchy is spouse, children, parents, then siblings. This is a significant oversimplification, so it’s difficult to get a clear understanding of how your business will be distributed. However, with intestate succession, the most important things to note are:
- You will not get any say in who takes over your business
- Only close relatives will have any chance of receiving an ownership interest
If you had hoped that your best friend or cousin would become the owner when you passed, that likely isn’t going to happen without a carefully constructed business succession plan.
Business Succession and Probate
In some situations, probate can supersede business succession plans. Working with an experienced Florida estate attorney can ensure that your plan is created appropriately and probate does not interfere with your wishes for your company. Whether you own a sole proprietorship, partnership, or any other type of business entity, you will want to ensure your share of the company is handled the way you believe is best.
Careful planning will involve evaluating the needs of the business and who you think will be able to handle those needs in the future. You may think that your sister is best suited to take over your position or that your stepson can grow the company to meet changing demands, but that won’t happen unless you plan ahead. Do not leave this decision to the probate court and intestate succession laws.
Business succession planning is also important to account for a vital part of your company – the employees. If you leave the plans for the future of your business up to chance, employees may feel uncertain about their own futures or even think their contributions were not valued. Employees who feel unappreciated are likely to find employment elsewhere. In fact, 79% of people who quit their jobs cited a lack of appreciation as a contributing factor. An unprepared, unskilled family member inheriting your company with no remaining employees is not an ideal scenario, to say the least. That’s why you need a business succession plan.
Hiring the Right Representation for Your Probate and Business Succession Needs
Boyer Law Firm believes that estate planning and probate don’t have to be burdensome or daunting. We strive to make the probate process as seamless and easy as possible by working with you to create a comprehensive estate and business succession plan. Don’t risk having your business and legacy ruined by a lack of careful and proper planning. Call us at 305-921-9665 or send us a message on our contact page to schedule a consultation.
