Why Establish Succession For Your Florida Business?
If you own or run a business in Florida, you may be so busy just trying to keep up with the day-to-day needs of your business to worry about its succession plan. However, having an established plan for the succession of your business can ensure that it will continue regardless of what happens to you. The fact of the matter is that if you own a business, the general rule is that if you die, it dies. In order to keep that from happening, you need to have a plan in place. In fact, many people don’t realize that death is not the only reason to plan for your business’s succession. Without a succession plan, something as simple as a partner getting a divorce or retiring can be catastrophic to the company. Having a succession plan in place means that your business can survive your personal vulnerabilities and ensures that you will have a solid plan in place for running the businesses in the event that some unplanned event occurs. Otherwise, you may find yourself trying to navigate a tragedy and desperately trying to save and restructure your business at the same time. In that sense, developing a succession plan is setting yourself up for success. Whether you own a small business or a large corporation, establishing a succession plan is critical to creating the tools and decisions that your business needs to flourish, even when you are not there to make them. Again, these decisions are not just relevant in the event of death, but divorce, retirement, disability, or incapacity. This is a plan that any business should have on hand. Investors also look to the existence of a succession plan as an indication that their investment will be protected and that the business can exist apart from the owner.
How a Partner’s Divorce Can Destroy Your Business
Although you may think that the personal choices of you and your partners are insulated from your business decisions, that is unfortunately not the case. Without a succession plan or operating agreement that includes a properly drafted buy/sell agreement there is no way of guaranteeing that in the event of a divorce, a partner’s spouse will not be able to take an ownership interest in the company. Buy/sell agreements are the only completely effective way to protect against this outcome. These agreements require the spouse to sell any ownership shares back to the business immediately upon receiving them.
What Happens to Your Business if a Partner Dies Unexpectedly
If a partner of your business dies without a valid will, all of their assets, including their ownership interest in the business, will have to go through the Florida probate process. This process can take several months, or even more than a year, depending on the size of the estate and the complexity of the probate process. The probate process is made more complex when beneficiaries challenge the validity of the will, or when there are complications with regard to verifying the validity of the will.
Talk to a Florida Estate Planning Attorney
If you need assistance creating a succession plan for your business, contact The Law Offices of Larry E. Bray and find out how West Palm Beach estate planning attorney Larry Bray can help you protect your business. Contact us today and schedule a consultation.