When you own a business, planning for its future involves deciding what happens after you no longer run it. You need to decide who should own your business, who should manage it if you become incapacitated or die, and how ownership and management should transition over time. Your estate planning documents and your business governing documents each establish part of that plan. A coordinated business owner estate plan in Florida ensures that the documents work together to carry out the same business succession strategy.
Since 2008, BrewerLong has helped business owners throughout Central Florida plan for every stage of the business lifecycle, including business formation, growth, ownership transitions, and succession planning. Our Orlando estate planning attorneys work closely with you to understand your long-term goals, explain your legal options in plain language, and develop coordinated legal strategies that protect both your business and your family. Whether you own an LLC, corporation, or partnership, we help you prepare legal documents that support your business today while preparing it for tomorrow.
What Does a Business Owner’s Estate Plan in Florida Typically Include?
Your estate plan establishes instructions for managing your affairs if you become incapacitated and distributing your property after your death. If you own a business, those instructions typically address your business property along with your personal assets. Wills and trusts are two of the primary tools business owners use to create instructions for managing those assets.
How Do Wills Work?
A will is a legal document where you direct how your property should be distributed after your death. In your will, you appoint a personal representative to administer your estate, called an executor. After you die, your personal representative uses your will to instruct them through the probate process. They gather your assets, pay your debts and taxes, and distribute your property according to your will.
Your will may transfer your ownership rights in your business just as it transfers your other property. For example, you may direct that your children inherit your ownership interest in a family business, or that one child inherit your ownership while another receives other assets of comparable value.
How Do Trusts Work?
A trust is a legal arrangement that allows you to manage and distribute property according to specific terms you customize. You create a trust by deciding how you want property to be managed and distributed, recording those decisions in the trust’s terms, selecting the people responsible for carrying out those instructions, and transferring property into the trust.
When you create a trust, you name a trustee to manage trust property according to your instructions, a successor trustee to step in if the trustee can no longer serve, and one or more beneficiaries to receive benefits from the trust.
You also choose trust terms establishing how the trust works, addressing, for example:
- How the trustee should manage trust property,
- When and how beneficiaries should receive distributions,
- Whether the trustee has authority to use their judgment while managing or transferring trust property,
- How business interests held by the trust should be managed, and
- Who becomes the successor trustee if the original trustee can no longer serve.
You can use trusts to accomplish many different personal and financial goals, including:
- Managing personal property,
- Supporting beneficiaries over time,
- Providing for beneficiaries with special needs,
- Making charitable gifts,
- Minimizing tax obligations, and
- Protecting assets.
Business owners often use trusts to achieve business-related goals, too. For example, you may use a trust to:
- Plan for someone to exercise your ownership rights if you become incapacitated,
- Establish how your business ownership should be managed after your death,
- Continue managing business ownership for multiple beneficiaries before distributing it to them, or
- Separate responsibility for managing a business ownership interest from the people who ultimately benefit from that ownership.
In those circumstances, you may transfer partial or full ownership of the business into the trust. Once the trust owns part or all of your business, the trust’s terms and your business governing documents both determine how that ownership is managed and ultimately transferred in the future.
What Do Operating Agreements and Business Governing Documents Do?
When you establish a business with one or more owners, you create governing documents that spell out how the business works, including what rights each owner has in the business, such as the right to:
- Share in profits and losses,
- Vote on major business decisions,
- Participate in management,
- Inspect company records, and
- Transfer your ownership to others.
If your business is a Florida LLC, your primary governing document is typically an operating agreement. Corporations commonly use bylaws and shareholder agreements, while partnerships generally use partnership agreements. Regardless of form, those documents establish how the business operates and set procedures for handling events that may affect it in the future.
How the Business Operates
Your operating agreement establishes how the business operates, such as:
- How owners vote on major business decisions;
- Which decisions require unanimous approval and which require only a majority vote;
- Who manages the company’s daily operations;
- What authority managers have to sign contracts, spend company funds, or hire employees;
- How the business calls and conducts meetings;
- How owners can review company records and financial information; and
- How the business admits new members or shareholders.
These procedures create the framework your business follows throughout its operation. When an owner dies, becomes incapacitated, or transfers an ownership interest, those same procedures help the business continue operating while ownership and management transition.
How Ownership Changes and Management Change
Ownership may change because an owner dies, becomes incapacitated, retires, sells their interest, gifts it, or otherwise leaves the business. Your operating agreement may establish procedures for:
- Who may receive the ownership interest,
- Whether existing owners must approve the transfer,
- Whether existing owners have a right of first refusal,
- Whether the business may restrict ownership transfers, and
- What steps someone must complete before becoming an owner.
The people who operate the business when ownership changes complete the process of changing owners according to the operating agreement.
How Management Changes
Many businesses divide ownership and management between different people. Your governing documents may also establish:
- Who manages the business,
- How the business selects or replaces managers,
- Who has the authority to make important business decisions, and
- Who assumes management responsibilities after an owner’s incapacity or death.
These procedures help the business continue operating as leadership changes over time.
How the Business Handles Ownership Buyouts
Your operating agreement also typically establishes procedures governing major events that your business may experience, such as:
- Events triggering a buyout,
- How the ownership interest is valued,
- Who purchases the ownership interest,
- How the purchase is funded, and
- When payment occurs.
By establishing these procedures before disagreements arise, business owners create a more predictable process for future ownership transitions.
How Do You Coordinate a Will and Trust with an Operating Agreement?
Coordinating an LLC operating agreement and estate plan in Florida means comparing the instructions within various estate planning and business documents, identifying where they overlap or lead to different outcomes, and revising them so they work together toward the same succession strategy. Typically, an attorney guides the process by explaining how each document functions, identifying inconsistencies, and recommending changes that better align with your business and estate planning goals.
Review Your Documents with Your Attorney
Begin by reviewing your estate planning documents and your business governing documents together. As you review them, identify the future events they address, such as your incapacity, your death, or the transfer of your ownership interest. Then, determine whether more than one document establishes instructions for the same event. If they do, you work with your lawyer to determine whether those instructions align and or unnecessarily duplicate one another.
Your attorney also identifies situations where one document assumes another document will accomplish a particular objective. For example, your will may assume that your beneficiaries will inherit your business, while your operating agreement establishes a different process for transferring ownership. Likewise, your trust may authorize a trustee to manage a business interest while your governing documents establish different procedures for exercising ownership rights.
Reviewing your documents together helps identify these issues before they delay probate, disrupt business operations, create disagreements among family members or business owners, or transfer ownership in unintended ways.
Coordinate Your Will
Your will may direct your personal representative to transfer your business interest to a particular beneficiary, divide it among several beneficiaries, or transfer it to a trust. Compare those instructions with the procedures established by your governing documents.
For instance, a will may direct a transfer to a beneficiary, whereas an operating agreement requires the business or the remaining owners to purchase that interest. You might revise the will to account for the sale proceeds, amend the operating agreement to permit the intended transfer, or adopt a different succession strategy. The final documents should establish one workable path for the business interest after your death.
Coordinate Your Trust(s)
Your trust’s terms may direct the trustee to hold your business interest, exercise its ownership rights, distribute income to beneficiaries, transfer the interest later, or distribute proceeds from its sale. Compare those instructions with the procedures established by your governing documents.
If they do not align, decide what role the trust should play and adjust the documents accordingly. You might expand or limit the trustee’s authority, change when beneficiaries receive the interest, amend the operating agreement to permit trust ownership, or revise the trust so it receives sale proceeds instead of the ownership interest itself. By coordinating the trust’s instructions with the business’s procedures, you create a single combined ownership and management arrangement.
When Should You Review Your Business Succession and Estate Planning in Florida?
Your estate and succession plans should evolve as your business, family, and long-term goals change. Consider reviewing your coordinated plan after events such as:
- Forming a new business,
- Admitting or removing owners,
- Revising your operating agreement,
- Getting married or divorced,
- Having or adopting children,
- Purchasing or selling significant business assets,
- Experiencing substantial business growth, and
- Changing your long-term succession goals.
Regular reviews also help you address changes in Florida law and confirm that your will, trusts, operating agreement, and other governing documents continue supporting the same strategy.
Coordinate Your Business Succession Strategy with BrewerLong
Creating a business owner estate plan in Florida involves coordinating your business succession strategy and business plans with your estate plan. BrewerLong helps business owners develop coordinated legal strategies, and we can guide you through the process of coordinating your estate and business plans. Together, we can develop a comprehensive approach to your business succession and estate planning in Florida.
Contact BrewerLong today to discuss creating a coordinated business and estate plan.
Legal References Used to Inform This Page
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