When an entrepreneur or businessperson works hard to establish a family business, their family is often expected to take over the company and maintain his legacy.
One thing business persons forget to consider though is that they might not be able to preserve the legacy of their successful business without proper estate planning. Estate planning will help you determine your company’s future success, and minimize your family’s risk.
The misconception of living forever
Throughout their lifespan, many business people do not ask themselves an efficient question of what happens if they pass away or are disabled. They do not have a clear estate plan for the unforeseen, and then the business often dies with them, and the legacy stops.
The misconception of believing they will not die pushes them to a dead end. To avoid such a disastrous future beforehand, succession planning gets deserved attention and should be implemented.
Why is a business succession plan crucial?
Estate planning and business planning are steadily linked together. And considering that your business is potentially the most valuable asset, estate planning is crucial not only to the continuing success of your company but also to the potential well-being of your family.
For this reason, it is strongly recommended to have a business succession plan.
If a business succession plan is not in effect, you are almost certain to endure the stress and tension that causes a lack of preparedness.
Moreover, the biggest issue for the company arises that the employees are left with no boss to follow.
A stable business succession helps to mitigate or lessen the complications by ensuring a smooth transition between the owner of the family business and the potential owners of the business.
Not setting their family up for income and success
Many individuals fail to reveal the succession plan during their lifetime or ignore to prepare guidelines on how the family will derive the revenue from the business and continue the legacy of their parent.
Discussing the program with the family helps determine who needs to be directly involved in the business, and whose is centered elsewhere.
It might also help individual members of the family take an interest in the business they did not know they had. Most business people ignore setting up their families to continue earning their business income.
They should prepare for an enduring positive plan to help their families in the long run, before their deaths.
When assets are not titled properly
Although the terms of your estate plan and business succession plan satisfy the immediate goals, your estate plan may be undermined if your assets are not titled according to your specific estate plan. It is vitally important to check the titling of your estate periodically.
Also, the beneficiaries may not benefit from tax or registry update notices for titled properties, and probably will not have copies of the titles or deeds – unless you can provide them in your lifetime.
Several approaches can help pass the title to your beneficiary in a safe manner.
If a resident of Florida dies without a correctly drafted will transfer his or her estate as per the laws of Florida intestacy.
It ensures that if such an individual did not have a duly written and enforceable will in place at the time of death, the State of Florida will prescribe the disposition of assets to a resident of Florida.
Nevertheless, if a resident of Florida has a duly drafted and enforceable will be in place at the time of death, legal title to the estate must transfer in the manner expected by such person. Also, irrevocable trusts can be useful in transferring the title for the future.
Many partners mutually own all or any of their assets and have subsistence rights. Holding assets in this manner is very convenient because it provides transparent access to accounts for both the husband and wife. Probate will be minimized if all assets are jointly owned.
For more information on effective estate and succession planning for your business, please speak to one of our experienced estate planning attorneys at Finity Law Firm.