Your Guide to Estate Planning for Small Business Owners
By: Barry E. Haimo, Esq.
February 11, 2021
As a small business owner in Florida, you wear an infinite number of hats in any given week. Throw in the unprecedented challenges you probably faced in the last year, and there’s no doubt you’ve been stretched thin in order to protect the business you’ve built.
At some point over the course of 2020, the thought of what will happen to your business when you’re gone is likely to have crossed your mind as well.
Keep the future of your small business safe. Review this brief guide on the four basic steps to better business estate planning for your small business in Florida. Then learn where to find the resources you need for more comprehensive planning.
Utilize Basic Estate Planning Tools
Just like your personal legacy, every business estate plan should make use of the basic business estate planning documents. Essential tasks that should be addressed are:
- Step 1: Including your business in your will. Clearly state your wishes for the company and how you’d like it (and all related property) to be distributed upon your death.
- Step 2: Adding provisions for your business dealings in your powers of attorney and healthcare directives. Appoint appropriate decision-makers and facilitators to manage the business on your behalf.
- Step 3*: Executing the appropriate estate and business planning documents to ensure the continuation of your business in a way that meets your goals and expectations. The tools you use will be unique to your circumstances.
This will ensure your business is placed in the hands of someone you trust. If you do not specifically speak to your business activities in your estate planning documents, the company could simply be divided according to Florida’s intestate laws.
*Experienced business estate planning attorneys cover everything from business trusts, succession plans, and buy/sell agreements for smooth transitions to changes in business structure to maximize tax efficiencies. It’s a process and one we’re delighted to help you navigate.
Insure Yourself and Your Business
Besides basic liability insurance on your business, every small business owner in Florida should maintain an adequate life insurance policy to provide family members (or other beneficiaries) with replacement income upon your death.
Disability insurance is another type of policy to consider for coverage in scenarios involving both short- and long-term disabilities.
Furthermore, an additional business policy can also guarantee temporary income to continue business operations in your absence.
There are a number of personal life and disability policy subcategories of coverage to consider, including but not limited to:
- Term life insurance
- Whole or permanent life insurance
- Lone or rider disability policies
- Key person insurance policies
Your estate planning attorney should be familiar with and be able to offer advice regarding adequate coverage based on personal factors such as your age and health, you and your family’s lifestyle, and your children’s ages.
For your business, they can help you determine appropriate coverage to keep your business operational through transitions after yours or key employees’ passing.
Open Communication Lines on Your Business Estate Planning
There are several points in the business estate planning process where open lines of communication with involved parties is essential.
Before you begin planning, for instance, you should consider any issues concerning heirs. It is not uncommon for one child of a business owner to be interested in taking over the family business, while another hates the thought.
What better way to know your children’s hopes for the future than by talking with them about it? Your attorney can then help you develop a fair plan while avoiding inter-sibling quarrels that would otherwise put your business at risk.
Another common concern is keeping the business in the hands of blood relatives. Careful estate planning can solidify those business goals as well.
Once you’ve created your plan, anyone affected should be notified. Open lines of communication help to avoid confusion, conflict, and added heartache in the wake of such a personal loss among your survivors.
Talk to the folks you hope will step into decision-making roles in your stead. Make sure your beneficiaries know where to find your business estate planning documents. Tell your employees what will happen in the event of your illness or death.
Revisit Your Business Estate Plan Regularly
Tax legislation and estate planning guidelines change all the time. Reviewing your business estate plan on a regular basis will keep your plans compliant with Florida law while still achieving your overall business estate goals.
Even life events like divorce, marriage, and the birth of children in your family can affect the way you’d like to see your business legacy passed down.
Working with a business estate planning firm that intimately understands your needs and wishes is the best way to keep your plans current. Here at Haimo Law, our business clients typically meet on an annual or biannual basis for planning reviews at a minimum.
If you have questions or concerns about meeting your small business planning goals in Florida, visit the Haimo Law blog for insights or reach out directly to schedule a consultation! We are here to help.
Barry E. Haimo, Esq.
Strategic Planning With Purpose®
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