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Business Succession Planning for Small Business Owners in Florida


Lake Mary, Winter Park, Longwood, and Maitland, Florida Business Law & Business Succession Attorney

One thing few successful business owners plan for is their own death or disability.  Who will run the business when you are no longer able to?  Who will own the business after your death?  Many successful small businesses fail simply because ownership end up going to people who are not capable of the responsibility, or who are unable to get along with each other and jointly make the decisions necessary to ensure its longevity.

It is first important to understand that the management of the business will ultimately be controlled by its owners (shareholders in the case of a corporation, members in the case of a limited liability company) through their legal power to directly or indirectly appoint the persons who will run the business.   So the first step should be to ensure that ownership passes quickly and smoothly to the new owners without being tied up in an unnecessary probate or guardianship proceeding.  This can be done by titling your stock or membership interests to your own living trust.

In the living trust you can appoint a successor trustee or trustees who will have the power to immediately exercise management rights upon your incapacity or, in the event of your death, until the ownership is transferred to the trust beneficiaries.  In the trust you can also specify who will be the new owner or owners of your stock or membership interest.

It is in cases where ownership will be split up amongst more than one beneficiary that the thorniest problems can arise.  What if one of your children is responsible and one is not, but you want them both to share in the profits of the business?  In that case you could set up a shareholders’ agreement prior to your death that will specify that only the responsible child will have management rights.  You can also provide for optional or mandatory buy-out rights, where for example the child managing the business will have the right to buy out the non-managing child.

If it is your wish that trusted employees will run the business and perhaps own a share, while some or most of the profits will go to your children, perhaps with buyout rights via which the employees can or must buy out the children, you can also use a shareholders’ agreement to provide for this. 

You can also establish a “voting trust” whereby your chosen, trustworthy persons will act as trustees to vote the stock of minor children or less responsible individuals.

There are many options available, depending on what goals you hope to achieve.  For more information on business succession planning in Florida, please contact us. 

Florida Estate Planning Attorney, Vincent J. Profaci, P.A., assists Clients with Estate Planning, Probate & Trust Administration, Corporate Law and Business Succession Planning, Real Estate Transactions, Elder Law, Long Term Care Planning, Florida Medicaid, Medicaid Crisis Planning, Wills & Trusts, Estate Administration, Asset Protection, Estate Tax Planning, Charitable Planning, Special Needs Planning, and Guardianship, in the cities of Winter Park, Longwood, Lake Mary, Maitland, and Heathrow, Florida, and the surrounding areas.  

 

Copyright Vincent J. Profaci. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement. Some artwork provided under license agreement.

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