While putting a business estate plan into place can provide entrepreneurs in Florida and around the country with peace of mind, there are also a number of tangible benefits that can be reaped from addressing succession issues in a timely manner. A business estate plan can help avoid costly disruptions following the death of a principal and provide managers with a strategy for future growth. For example, drafting a buy-sell agreement could prevent bitter disputes erupting between heirs and partners and keep unqualified or unsuitable individuals away from important decisions.
Buy-sell agreements are especially important when businesses have multiple owners. These agreements provide clear instructions for how business assets are to be treated following the death of a principal, and they may allow other owners to automatically acquire the deceased principal’s share of the company. A business estate plan can also reduce exposure to estate taxes. Placing business assets in a grantor retained annuity trust allows entrepreneurs to maintain their income streams while transferring ownership of their businesses to their heirs. This arrangement also prevents any appreciation in equity or value being subject to estate tax.
In addition to addressing tax and ownership issues, a business estate plan can provide a roadmap for future growth and specify how the deceased owner’s duties and responsibilities should be apportioned. They can also reward trusted employees and ensure that the deceased owner’s vison endures when they are no longer able to hold the reins themselves.
Attorneys with experience drafting estate planning documents may recommend establishing a family limited partnership or a family limited liability company to transfer business assets and reduce taxes. Legal professionals may also recommend revisiting business estate plans on a regular basis to ensure that they continue to reflect the owner’s wishes.