Page 7 - Jupiter West - May '22
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Jupiter West, Page 7
       What Happens To Your Business When You Die

       Submitted by Anné                                 they leave their interest to one or more co-owners. In this   of probate, leaving more for your heirs. Strategies used to
       Desormier-Cartwright, J.D.                        case, a buy-sell agreement can ensure that the decedent’s   avoid probate may also minimize estate and inheritance
         You spend a significant                         beneficiaries do not unintentionally become owners.   taxes that are levied on the decedent’s assets. The threshold
       part of your life building your                     3. Plan for management and ownership. Your      for the federal estate tax is quite high, but 16 states and the
       business, and it becomes a                        business succession plan must do more than simply name   District of Columbia also have an estate tax, an inheritance
       major part of your legacy.                        who receives your business. A succession plan should   tax, or both (Florida does not).
       But when you die, everything                      address issues such as training and supporting successors;     • The business fails. Succession planning does not
       you have built could fall                         delegating duties to successors; naming outside directors,   guarantee the continued success of the business after you
       apart if you have not taken                       advisors, and professionals; designating who will own the   die. Although the eventual outcome is outside of a deceased
       the time to create a business                     business versus who will manage the business; and retaining   business owner’s control, you can take steps to position the
       succession plan. Without a                        key employees. Thinking ahead about such issues will   business for success. Small details matter. Is your chosen
       plan in place, your business’s                    improve the odds that ownership and management changes   successor likely to work well with existing associates? Are the
       fate may be decided by a court instead of according to your   won’t cause the business to fail.     best interests of your business and the best interests of your
       wishes. You can take actions now to position your business     4. Get creative. Wills,  operating  agreements,  and   family compatible? Should you transfer the business during
       for continued success – even when you are no longer around   buy-sell agreements are common legal documents used   your lifetime? How will your departure from the business
       to run it. Depending on the type of business entity you have   to specify what happens to your business when you pass   affect suppliers, creditors, customers, and employees? When
       formed, a business succession plan can be addressed in your   away. There are some other solutions that might work well,   did you last review your estate and succession plans, and have
       last will and testament, the business’s operating agreement, or   however, depending upon your particular situation. One   there been significant changes to the business since then?
       in a buy-sell agreement. Consider consulting with an attorney   solution is gifting the business to a successor while you are     Understanding business succession and creating a
       who can explain the options for business succession planning   still alive. Another is to create a living trust and transfer   comprehensive plan can allow your company to thrive
       and help you take the necessary next steps.       the business into the trust during your lifetime, with the   in your absence. Don’t leave anything to chance. Talk
       Business Succession Planning Considerations       person you want to succeed you named as the successor   with experienced business law, tax, and estate planning
         Before you create a succession plan for your business,   trustee who will step into your shoes at the time of your   professionals about how to protect the legacy of your business.
       keep in mind the following key steps:             death. Other succession strategies you can consider involve     If you have questions about your estate plan and what
         1. Determine the type of business entity. Is your   creating a sophisticated trust or setting up a family limited   documents you should have in place to plan your estate,
       business a sole proprietorship, partnership, limited liability   partnership or a family limited liability company.   schedule a free consultation today by calling our office at
       company, or corporation? The type of business entity affects   The Risks Of Not Having A Plan       (561) 694-7827, Anné Desormier-Cartwright, Esq., Elder
       more than just taxes and day-to-day operations. It can also     Not having a business succession plan could lead to   & Estate Planning Attorneys PA, 480 Maplewood Drive,
       affect the succession planning options available to you. If   headaches and disputes for your heirs and damage the   Suite 3, Jupiter, FL 33458.
       you own your business as a sole proprietor, for instance, no   company you spent years building. The following are some     The content of this article is general and should not be
       one else has an ownership interest, so you are free to pass   risks of not having a plan:           relied upon without review of your specific circumstances
       the business on to your chosen successor (or successors).     •  Business assets and ownership will go through   by competent legal counsel. Reliance on the information
       But if co-owners are involved, your share of the ownership   probate. Business assets, including ownership interests,   herein is at your own risk, as it expresses no opinion by
       could be distributed to them per the terms of an operating   generally must go through the probate process upon an   the firm on your specific circumstances or legal needs.
       agreement or other legal document.                owner’s death. This may not be a problem if your will   An attorney client relationship is not created through the
         2. Determine who gets the business. Some owners   describes in detail the distribution of business assets to   information provided herein.
      want to pass their business on to their family, and it may   beneficiaries. But if your will is silent on this subject, the     To comply with the U.S. Treasury regulations, we must
      make sense to do so in a will upon the owner’s death. Other   assets will be divided among your beneficiaries when your   inform you that (i) any U.S. federal tax advice contained in
      owners may want to have the business sold after they die so   estate is settled. At that point, your business is unlikely to   this newsletter was not intended or written to be used, and
      that the proceeds can be distributed to their beneficiaries.   end up in the hands of the successor you would have chosen.   cannot be used, by any person for the purpose of avoiding U.S.
      Business owners can also leave their businesses to nonfamily     • Your heirs will owe taxes and expenses. Probate   federal tax penalties that may be imposed on such person and
      members, such as employees or charity. Still, some owners   expenses are paid out of the estate. Through careful   (ii) each taxpayer should seek advice from their tax advisor
      may prefer that the business continue to operate while   planning, you may be able to transfer business assets outside   based on the taxpayer’s particular circumstances.

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