Life is a game of chance. No one knows when their last day will be. If you own a company and something happens to you, your death could throw your business into chaos. This is why you need to have a business succession plan in place to avoid any questions as to who owns your business for when you’re no longer in the picture.
It’s not uncommon for business owners to be assessed taxes when they pass away. Your company may continue to grow in value as your estate goes through probate. This can cause your company (and your estate) to have a larger tax liability than if there had been some type of business succession plan in place.
One of the best things that you can do as a Miami business owner is to leave your ownership stake in your Florida company to your other co-owners. You can accomplish this by drafting a buy-sell agreement. If you decide to go with this option, then your partners will have to automatically purchase your interest in your company should you die.
This helps reduce the chances that your spouse or another heir will inherit a company that they didn’t know how to manage or want. Any interested party may be able to purchase and use a life insurance policy or an irrevocable life insurance trust (ILIT) to cover the cost of the buy-sell agreement if there’s an issue with liquidity.
An ILIT generally doesn’t have to go through probate. This frees up any money contained in it for use in paying estate administration costs. You may qualify to have your business assets transferred to others via a grantor retained annuity trust (GRAT) or grantor retained unitrust (GRUT) once you pass on. Your estate wouldn’t incur any being assessed any taxes on the appreciation value of your home if you were to do this.
Owning a business can be very complex. Leaving it behind when you ‘re gone without a proper business succession plan in place can make it even harder for your family members or heirs to deal with things though. A wills attorney may be able to use their expertise and experience in aiding other Miami business owners can help you plan for the succession of your business so that you can rest in peace once you’re gone.