Many Florida entrepreneurs work their entire lives to create successful businesses and leave a legacy for future generations. However, the lack of an effective succession plan can ruin years of hard work dedicated to a business.
Keep reading to understand the importance of family business estate planning in Florida.
Family-Owned Companies vs. Business Succession in Florida – The Fundamentals
The term “family business” refers to a commercial organization that is owned by family members, related by blood, marriage, or adoption. In this type of company, the decision-making is generally influenced by different relatives.
While family businesses have several advantages, the different viewpoints and willingness to pursue distinct goals may result in a “grey area” where business interests and family interests intermingle.
Depending on how a family business is structured, the death or incapacitation of one of the leading business members can jeopardize business succession.
Small and medium sized-family businesses often lack the estate planning tools to overcome this type of situation efficiently. Situations like death, retirement, incapacitation, divorce or partnership breakups may even result in a family business’s failure to survive.
The guidance of an experienced estate planning attorney is crucial for the structuring of an estate plan focused on the needs and purposes of family-owned companies.
Careful business decisions and accurate legal strategies may guarantee that both the business and the next family generation are prepared for necessary transitions.
Family Business Estate Planning in Florida – What Are the Steps Involved in the Process?
The first step to protecting the legacy of a family-owned business is proceeding with an in-depth assessment of the company’s vision, mission, and goals. In this process, the business owners must ask themselves:
- What are the owners’ retirement plans?
- Is the next family generation prepared to inherit and run the company?
- Who are the leading members of the company?
- Is the company prepared to survive a process of death, incapacitation, divorce, or other unforeseen situations involving one of its leading members?
- Is the company structured to function outside the family circle?
With the necessary information in hand and the guidance of an expert Florida attorney, it is possible to develop a solid business succession strategy.
Determining Who Will Inherit the Company
The next step is to identify whether the business owners should remain strictly among family members, or third parties could join the company in the future, such as new shareholders, executives, and directors.
Depending on each situation, an expert attorney will advise the parties involved to pursue a retention plan or a buy-sell retention plan to preserve the family’s interest while protecting the business legacy.
Determining the most suited individuals to inherit the company is also a sensitive and complex decision. In such cases, holding a council with multiple leading figures in the business is fundamental to discuss:
- Who should lead the company in the future?
- Who should occupy other key roles within the company?
- Different strategies to structure the business for succession
- Fundamental adjustments in the business’s legal aspects and taxation