That’s right. To pass along those assets you’ve created, nurtured, and grown, the default estate plan requires your family to sue itself, your business and surviving partners, and your creditors. Which parties do you think get the best treatment? Its not your family, its not your business partners…its your creditors.
You owe it to yourself and to your business to put in place the plan you WANT for your personal and business assets, involving the people you want, giving priority to those you care about most, and making it as easy as possible to deliver those assets to the right people when you pass away. Remember though, estate planning is not just planning for your death, it’s also planning for your incapacitation.
If you were to be severely injured in an accident today, who would run your business? Who would be able to contact your customers? Your contractors? Your suppliers? Your lenders? Your business deserves a better plan than “everyone will have to sue to be taken care of.”
For individuals, their home is often their most valuable asset. Next, is their retirement investments. For a small business owner (100 or less employees), your business is often your most valuable asset. Things that are valuable deserve the utmost care; that is why they should never be left to the state or legal zoom!
Below I discuss some of the mistakes business owners make in their estate planning.
Mistake 1:
Not having a plan. This leaves them and their loved ones needing to open up guardianship, probate, and business litigation to get anything done if the owner of the business becomes incapacitated or dies.
Mistake 2:
Having a bare bone “Will” as a plan. Here, the business owner creates a “will” but fails to account for management and transfer of the business upon his passing. Operations can be disrupted for years, killing cash flow, reputation, and the business. Because probate litigation is public, it leaves your business matters open to competitors and creditors. Also, a Will does nothing to ensure that the business is taken care of if the business owner become incapacitated.
Mistake 3:
Having a trust based plan in which no part of the business has been incorporated. An empty trust is as good as a bare bones Will. Trusts which have not received the assets of the business owner will require probate and likely, business, litigation to transfer assets to the people the owner has designated.
Mistake 4:
The state of Florida has an estate plan for you, and that plan is the MOST expensive. Its called: LITIGATION.
Not having corporate governance documents that indicate who will act when the business owner becomes incapacitated, and what value the business assets will have upon the death, divorce, or retirement of the business owner!
If you’ve made one or more of these mistakes in your Business Estate Plan, and would like to put yourself, your business, and your family in a better place now and when you pass away, call 813-480-2106 or email clientcare@lcolawfl.com to get started.