What You Should Know About Corporate Estate Planning
The daily lives of most business individuals involve working hard to provide basic needs for themselves and their families. A majority of businesses are managed based on short term goals with no clear plans for the long-term. One misconception that business owners have is that estate planning is reserved for personal assets like houses, land, cars etc. Therefore, it is commonly seen that the few who have an estate plan in place, fail to factor in their businesses and how to handle the disposition of the businesses in the event of death. If 2020 has shown us anything, it is that life is full of uncertainties; therefore, death can come at any time. If and when that time comes, your beneficiaries will have to claim a share of your business. Without a clear succession plan in place, it is likely that endless disputes will likely arise.
A business is a valuable asset just like land, houses, or cars. Therefore, it is important to ensure that while you review your assets, you consider any business in which you have an ownership interest in as well. Many people avoid the discussion around estate planning because of the fear of death. However, you need to note that estate planning allows you to have a say on the distribution of your property in the event of death or incapacitation. If you are looking to learn more about corporate estate planning, please reach out to an Estate Planning Attorney in Orlando from Nishad Khan P.L. to have all your questions answered.
Tips for estate planning
Have a Buy-Sell agreement drafted by an Estate Planning Attorney Orlando in place
The owners of the business know best what it takes to run the business. When you die, and your beneficiaries inherit your ownership interest in the business, your business partner might have a hard time coping with new people coming in to take part in running the business. The same case applies where a business partner passes on, and his or her beneficiaries come on board by inheriting the deceased partner’s ownership interest in the business. A buy-sell agreement drafted by a competent Orlando Estate Planning Attorney and entered into between the owners of the business can help resolve any potential disputes which might arise at a later date. The salient provisions of buy-sell agreements are to restrict a lifetime transfer of business ownership to a third party and will include provisions on how the business partners will deal with the business in the case of death of one of the owners of the business. With such an agreement, you have the opportunity to eliminate possible disputes from family members who are interested in taking over your position in the business and possibly interfering with the remaining owners in the management of the business.
Any business with clear future plans should have life insurance. Most times, once a business partner dies, the proceeds from the business life insurance policy is what surviving owners of the business will use to compensate the estate of the deceased owner. If you intend to commence your estate planning process, our Estate Planning Lawyer in Orlando will refer you to a reputable insurance company for assistance with a life insurance plan that may be best suitable for your circumstances.
Use of an irrevocable trust
In place of a buy-sell agreement, you can use an irrevocable trust as part of your estate planning. As the name suggests an irrevocable trust cannot be terminated unless permission is granted by the relevant parties, e.g., all of the beneficiaries of the irrevocable trust, or by the court. In the case of the death of a business owner, an irrevocable trust will direct how the business is to be managed by the trustee. The irrevocable trust could be structured so that the business assets are sold and/or divided among the trust beneficiaries upon the death of the business owner. Alternatively, the irrevocable trust could be structured so that the business continues to exist, for the benefit of the trust beneficiaries, and such business is to be managed according to the provisions within the trust.
In the absence of an irrevocable trust or a buy-sell agreement, your loved ones might be forced to open a probate matter with the court to determine how the business should be divided among your beneficiaries. The probate process can be lengthy and quite costly, which can, in turn, eat into the assets, so it is best to address how to handle your business in the event of your death sooner rather than later.
The creation of an irrevocable trust requires one to work diligently with an Estate Planning Lawyer in Orlando. Our Orlando Estate Planning Lawyer has an in-depth understanding of how to properly draft a trust instrument and an Orlando Estate Planning Lawyer can offer you all the assistance you require to ensure your estate planning endeavors are in order.
Contents of an estate plan
When an estate plan is mentioned, most people will only think about wills. Our Estate Planning Lawyer Orlando can guide you on several other estate planning instruments like:
Power of Attorney
Directions on guardianship
How assets are to be transferred in the event of death, etc.