If you own a business, the last thing you want is for your hard work to be for naught. Have you given much thought to what you want to happen to your business when you die? Though it is a bit morbid, business succession planning is a must-do for any business owner. In this article, we will go through some of the most common, basic business succession planning FAQs.

1. What is business succession planning? 

Let’s start with a basic definition. Business succession planning is a series of both financial and logistical decisions about who you want to take over your business after you no longer run it. There are a lot of elements that go into a successful business succession plan, so it is best referred to as a conglomeration of important steps and documents. 

2. What are the common ways to transfer ownership? 

Some common ways to transfer ownership of your business include selling your shares to a co-owner or key employee. You can also sell your interests back to your company or to an entrepreneur outside the business. If you want, you can even keep it in the family by passing ownership interest to your heir/family member. 

3. Do you have to die for the plan to be put in place? 

Though we referenced death in the opening paragraph, you do not have to die for this plan to be put in place. You can retire or leave the company—all that matters is that you are no longer running the business. 

4. What is the first step? 

The first step of many is to determine a timeline. When do you want the succession to take place? Will it take place on a specific date or if you are disabled or die? After that, you can begin the work of picking your successor, formalizing SOPs, getting your business valuation, and more. 

5. What are some issues that companies face when succession planning? 

Deciding who to promote is often a huge issue when succession planning, along with maintaining the moral of the company. It is in your best interest to do a through evaluation of your proposed successor, as you want them to be someone who will keep company morale boosted. 

6. How do you decide who to promote, if you go that route? 

In reality, that decision is best left up to you. You should contact other people to see what they think, and our best advice is to just consider the issue really carefully. Determining leadership skills is not an easy task, and that is why this step of succession planning is often difficult for companies. 

7. What should the plan include? 

Each business succession plan is tailored to the particular company, but some major documents in the plan usually include a timeline, list of potential successors, Standard Operating Procedures (formalized), a valuation of your company, and details about how your succession will be funded. 

8. Should other people weigh in? 

It can be hard to know who to talk to during a succession. If you have people you rely on, don’t be afraid to ask them what they think. It is a weighty task to set up this sort of plan, and you don’t want to go it alone. Whether you tell your potential successor or not is up to you. Use your best judgment—if in doubt, hold off telling them until it is time. 

9. Can I change the plan?

Double-check with your lawyer just to make sure, but your succession plan can usually be updated, should you change your mind or have circumstances change. 

10. I’m confused. What do I do? 

This process can be confusing, and if you’re struggling, contact an attorney. They are best-suited to give you third-party legal advice and insight. 

Listed above are just some of the pertinent questions that business owners face when they are coming up with a succession plan. Above all, the most important step is number ten. Don’t be afraid to ask for help. Contacting an attorney will help shed light on the process, making it easier to maneuver. 

“Expect the best. Prepare for the worst. Capitalize on what comes.” Zig Ziglar

No one wants to focus on their own mortality but most people still have some kind of an end-of-life plan that includes a will and a burial plot. Unfortunately, small business owners tend to forget that their small business could be the largest asset they leave their family … but only if they plan for their business to live longer than they do.

Birth, death, sickness, marriage, divorce, natural disasters…these are all variables that can change your life and the life of your business. Ignoring them is not the answer. A good business succession plan can protect your small business from all of them.

What are the advantages of creating a business succession plan? First, it ensures an agreeable price for a partner’s share of the business and eliminates the need for valuation upon death because the insured agreed to the price beforehand. Second, any life insurance policy benefits will be immediately available to pay for the deceased’s share of the business, with no liquidity issues or time constraints. This effectively prevents the possibility of an external takeover due to cash flow problems or the need to sell business or other assets to cover the cost of the deceased’s interest. And third, a succession plan can greatly aid in allowing for timely settlement of the deceased’s estate, including avoiding probate and the eliminating the estate tax.

What are the most common questions resolved by implementing a business succession plan?

1. Who will be my successor?

2. How much is my business worth?

3. What will happen to my business partners and their families?

4. How will my business be transferred to my partners or heirs?

5. What happens to my company if I become incapacitated?

6. Can I keep my relatives from inheriting my company?

7. How do I protect my spouse and children?

At Wild, Felice & Partners, PA, we are able to provide a full range of legal services to our business clients. Whether buying a new business, selling an old business, or operating a current business, our lawyers are trained to examine all aspects of business planning and see to it that all possible issues are addressed. We pride ourselves on providing accurate advice for your specific business needs. Our law firm provides the knowledge and experience of a large law firm, while giving our clients the hands-on service and attention to detail that only a smaller firm can truly offer. Our lawyers regularly go beyond the customary services, tailoring their work to the specific needs of each client.

Our attorneys are well versed in a wide variety of legal practice areas which allows us to provide our clients with one-stop shopping for all of their legal needs. Rather than having to seek various individual counsels and having the headache of managing your own legal issues and costs, we provide the convenience of one South Florida location for all of your legal needs. You will receive the quality work product of a large law firm and the low cost and high attention to detail that small law firms are valued for.

We realize that each client’s needs are unique and treat each of our clients as if they are our only client. We hope you will take the time to contact one of our attorneys and truly experience all of the benefits that our South Florida law firm has to offer. We are able to provide the expertise and guidance needed to develop a succession plan specifically tailored to your business. Our lawyers are trained to examine all aspects of business planning and see to it that all possible issues are addressed.

For more information on how to plan for you business’ future, contact our South Florida law firm of Wild, Felice & Partners, PA for a free consultation at (954) 944-2855.

It’s a Wild world. Are you protected?SM

We’re all familiar with the ever popular Archie Comic book series. However, it’s a shame that the company is now subjected to bitter legal disputes between co-owners, Ms. Silberkleit and Mr. Goldwater, daughter in law and son of two original founders, respectively. Both have very different plans for the future of Archie and lack of common ground is disintegrating their work relationship. Ms. Silberkleit has an injunction issued against her from speaking publicly about the company and Mr. Goldwater has a defamation lawsuit on his back. Both parties have seemingly irreconcilable differences resulting in costly legal expenses, all which could have been avoided by a Business Succession Plan.

The founders of Archie, Louis H. Silberkleit and John L. Goldwater forgot that their business could well have been the largest asset they left their family. A good succession plan could have avoided the flaming legal contentions between the current CEO’s and safeguarded the future of the comic book empire. A crucial thing to consider is who will be the successor of the business. Two leaders of a company that continuously butt heads is unhealthy for the business. Other important affairs to consider are whether you want to keep certain relatives from inheriting your company, how to protect your children, what will happen to your business partners, and what the worth of your business is.

With a solid business succession plan in place, you can be sure of timely settlement of the estate after you are gone, avoid probate, and eliminate estate tax. Also, a solid plan ensures an agreeable price for a partner’s share of the business and ease of life insurance policy payouts. You can avoid liquidity issues and time constraints. This can prevent cash flow problems and the need to sell the business.

Learn from this Archie crisis. Avoid toxic family disputes and legal battles by preparing your South Florida Business Succession Plan today!

For more information on successful Florida estate planning and probate techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 or via email at info@wfplaw.com to schedule your free consultation.

It’s a Wild world. Are you protected?

Your business is important to you. You have worked hard to achieve the success your company has, and you want to make sure that your business is protected even after you are long gone. Succession planning is part of a well-rounded estate plan. Business owners use succession planning to determine who will take over their company—if anyone—after they die. Here are the things to know about succession planning. 

Life Insurance 

It might seem odd to start a succession planning discussion with life insurance, but, if you die with life insurance, you should direct the life insurance payout to your business. That way, your company gets a cash boost during a tumultuous time. There will be enough money in the bank to satisfy the payroll, and the cash influx will prove instrumental in ensuring a smooth succession—if there is to be one.

Documentation 

Have you thought about what you want to happen to your business if you die? If so, it is important to document this in writing. Only you can make this decision, though it is wise to confer with your management team as to what they think should happen. Once you feel comfortable, document it in writing. Contact an estate planning attorney to ensure that your documentation is properly done. Otherwise, your business may be put in the middle of an acrimonious succession.

Liquidation 

Perhaps you want your business to be liquidated and sold after you die. An M&A transaction stands for “Mergers and Acquisitions.” M&A transactions are complicated. During these transactions, ownership of the business (or the cash from the liquidation) is transferred to another entity or the company is consolidated with another entity. If you decide that this is what you want to have happen after you die, that also needs to be documented.

During an M&A transaction, some of your management team will need to stay on to see the process through. Give some consideration to how you want to incentivize them to stay through the process, even though it means that they will be losing their jobs. 

Other Considerations 

You might also want to keep your business in the family. Only you can determine whether your children are the best ones to take over your business, but note that, in terms of family transfers, a business is gifted to your kids, not sold. 

This is actually a good thing because it helps avoid certain taxes if you still want income from the business. If your kid has to buy your business, they will first have to make the money and pay taxes on it. After that, you will be paid a dividend on which you will have to pay a capital gains tax. Though gifting means you won’t get anything in return for the ownership you gift your kids, this could pay off in the long run, if you are being kept financially secure by your old company.

Buy-Sell Agreements 

If you’re not gifting your business and your company has multiple owners, you will likely run into one of these buy-sell arrangements: an entity plan or a cross purchase agreement. 

In an entity plan, each owner of the business has their own private agreement with the business as an entity. This agreement states that the entity will buy the dead owner’s interest after his/her death. 

In a cross purchase agreement, there are usually two or three people who own the business. the cross purchase agreement is established between the owners. When one dies, the surviving owners each purchase a proportionate share of the dead owner’s interest. 

All of this is a little confusing, and that isn’t a bad thing. You want a succession plan to be detailed and comprehensive. Hire an estate planning attorney to ensure that your succession plan is done properly and documented correctly.

You’ve worked hard for your business, and you don’t want to settle for less. Estate planning is a field of law that can greatly benefit business owners through key documents, legal strategies, legal tax minimization, and more. In this guide, we will discuss the basics of business estate planning. If this article seems like it is applicable to you, contact an estate planning attorney to learn more about how you can prepare your business for a future without you.

Estate Planning For Businesses

If you die and do not have a business succession plan in place, it is your business, family, and friends who will be left without direction. The execution of a deceased person’s last will and testament after their death can be tricky, but it is made far easier with a properly-executed, clear estate plan.

Estate Planning Strategies For Small Businesses

There are millions of small businesses in America, and they all should have an estate plan in place. When it comes to strategies for small business estate planning, here are a few you should note:

· Taxation Minimization

· Insurance

· Buy-Sell Agreements

· Family-Run Business Strategies

· Sole Proprietorship Strategies

We will discuss each of these in turn below.

Taxation Minimization

One of the best reasons to have a business estate plan is to minimize how much your estate will owe the IRS after you die. The IRS can tax anywhere from 35% to 50% of your business value after you pass, and that hefty sum is due nine months after the date of your death.

This often means that small businesses end up having to sell to pay off this burden. But, if you know your way through the IRS laws, you can minimize your business’ tax burden, 100% legally. An estate planning attorney who is trained in tax law can help you take advantage of IRS code sections and exemptions. This sector of estate planning will pay off handily in the future for your loved ones and employees.

Insurance

Having an insurance policy is a part of estate planning, as it can provide necessary capital to your beneficiaries (who, in some cases, may be your business partners) after you die. According to experts, there are three insurance coverage policies you should have, if you have a small business. These include:

· Worker’s Compensation Insurance. In certain circumstances, this insurance provides employees with financial, medical, and wage benefits if they are injured on the job.

· General Liability Insurance. This policy provides protection for your business in the event of claims against it for bodily injury and other liabilities.

· Professional Liability Insurance. Common among lawyers, doctors, and others in professional capacities, this business insurance covers professionals against customers’ or clients’ claims of negligence, personal injury, copyright infringement, and more.

Buy-Sell Agreements

This type of contract establishes a plan for your business in the event an owner dies or becomes too sick to work. The buy-sell agreement establishes a price for your company and your shares of it, and it allows you to document what you want to happen to the business after you die or cannot work anymore. Establishing the business’ price through a buy-sell agreement goes a long way towards convincing family members that they are getting the fair end of the deal, should the company sell or your business partners buy out your stake.

Family-Run Business Strategies

If you own a family-run business, have you thought about how you want to divide your company’s assets? Many estate plans distribute assets to heirs based on contribution levels, experience, and other factors. An estate planning attorney will help you consider how to best strategize your business’ future, taking into account your family and personal situation.

Sole Proprietorship Strategies

Sole proprietors know that they are their business—their personal and company assets are not separated. More than any other type of business owner, sole proprietors need a clear estate plan for what will happen to their company after they die.

If you have a small business with no estate plan, it is time to speak to an attorney to ensure that, if you die or something happens to you, all that you’ve worked hard for is protected. Contact a WFP attorney today.