When do Wills mean bottom line?
Peter C Leighton M.S. Ed.
Client Relationship Management, Palermo, Landsman & Ross, PA - South Florida’s Premier Full Service Accounting Firm
Planning for the future is not only necessary in your personal life, but also in your professional life, especially if you either own a business or invest in a business. Putting an estate plan in place and keeping it updated to reflect changes in the business, can protect your business in the event of your death. Two South Florida examples illustrate the necessity of planning for your business's health.
In November 2015, Pebb Enterprises LLC, based in Boca Raton, suffered the loss of two of its managing principals and five employees in an airplane crash. The plans put in place by the principals kept the company in business after the devastating event. In contrast, after the death of its president, Naples based Vantage Lighting was undervalued and dissolved, because the president died without a will.
An important consideration for estate planning with a business in mind is the concept of Continuity. One of the primary goals of the estate plan should be for the transition to be smooth and uncomplicated, without any interruption in the operations of the business. Having an estate plan is all the more important when the business is a family business. Without a plan in place, the passing of a principal person in a family business can impact both the professional and personal lives of the principal’s business partners and heirs, particularly if a dispute erupts over the ownership and/or management of the business. In many cases, "in family" arguments arise over the money Value of the business, how much it's worth at the time of a principal's death and its Value moving forward.