Business Succession And Estate Planning: How Can They Work Together?

Planning for succession in any business is one of the most critical decisions a business owner can make. The sustainability of a business in the future depends on decisions that are made now, and some of those decisions include questions such as:

• Will the business be viable beyond the lifetimes of the current owners?
• Are any family members or others not currently in the business planning to succeed any of the current principals? If so, what is their involvement and vision?
• Would current co-owners or future owners have any assets or liabilities that could impact the business?
• What levels of training and development will successors to the business need?

These are just some of the numerous considerations when making a business succession plan. These include questions ranging from simple (is this other person even interested?) to complex (what are the tax implications when one owner steps aside for another?)

Not all business succession considerations intersect with estate planning considerations, but some do. And when they do coincide with estate plan factors, the impacts can be tremendous.

Estate Planning Issues that Can Affect Business Succession

• Estate tax exposure. How a person’s assets are structured through wills and trusts can affect estate taxes for the decedent’s heirs, potentially creating problems with the successful transition of business ownership to those beneficiaries.

• Heirs and beneficiaries. Who stands to inherit any part of a person’s estate – and what they inherit – is an important consideration that can affect business succession. For example, a provision in a will that says, “Family members X, Y, and Z shall share equally in my ownership stake of the business” may make estate planning sense. But it could create problems for the business if these heirs are not equally committed to making the business run beyond the lifetime of their now-deceased relative. If you anticipate that your heirs might not see eye-to-eye on business administration issues, you want to address these issues while they are still within your control.

• Health care directives. One crucial element of estate planning involves advanced health care directives and Powers of Attorney. For a person’s own interests, this means establishing your goals and wishes in the event you are incapacitated, so your family or representatives can execute your plans. In the business sense, this means having a representative carry out business functions while you cannot do so and keeping the company afloat. Temporary or permanent disabilities are more common than we think, with about 1 in 3 Americans facing a 90-day disability (or longer) before they turn 65. Clarifying your goals and wishes in the event of a health emergency can be done through estate planning for the sake of yourself, your family, and your business.

• Avoidance of Probate. Without clear directives on how you want your business interests to pass forward and operate automatically in your absence, you risk having all issues settled through the costly and time-consuming probate process. This can be disastrous for a business that depends on flexibility and responsiveness. Whether it is the business itself or simply your ownership stake in a company, getting tied up in probate can create short- and long-term problems or even bring an end to the business itself. Proper planning can bring you, your family, and business associates’ peace of mind and financial security.

Our Tampa Estate Planning Attorneys Can Help You Get Your Business and Your Estate on the Same Page

As with any estate planning concern, preparation now can avoid problems down the road. If you’ve invested time, money, and labor in a business, you want to ensure your business goals are addressed in the event of disability or death. Our legal team understands your concerns and how best to manage them. Our Tampa estate planning attorneys will take the time to explain how to meet your personal and business goals and what estate planning tools may be best in your situation. Call our attorneys at 813-286-1700 or schedule a free consultation online to get started today.