Plan Your Business's Next Chapter Before You Need To

Business Succession Planning for Key Biscayne Owners

A business succession plan decides who will own your company next, who will run it, and how that change happens. Trust Counsel, PL focuses on trusts and estates matters and serves clients in Key Biscayne from its only office in Coral Gables.

Succession planning covers three things at once: ownership, control and continuity. It isn’t only about the money heirs receive at death. A plan that moves shares but leaves no one authorized to sign contracts or pay bills during an illness can halt a business quickly.

Key Biscayne owners often run family companies, professional practices or firms with a longtime partner. Many also have a spouse who isn’t in the business, children at different stages of life, or relatives abroad. Each of those facts changes the plan.

What a Florida Business Succession Plan Covers

A Florida business succession plan covers four parts: ownership, management, entity documents and incapacity. Each part has to match the others, or the plan can work against itself.

Ownership. Decide who receives the interest, whether children, partners, co-owners or a trust. Also decide who can trigger a transfer and when it happens.

Management. Name who can sign for the company during an owner’s illness, absence or retirement. Banks and vendors may ask for proof of that authority.

Entity documents. For an LLC, the operating agreement is the main rulebook. Under Fla. Stat. § 605.0105, the operating agreement governs relations among members and the company, except for certain matters the statute says an operating agreement may not change. The chapter’s default rules fill any gap. Your estate plan must match that document.

Incapacity. A business can stall when its owner cannot act. Under Fla. Stat. § 709.2104, a power of attorney stays in force after incapacity when it contains the statute’s durable language or similar words showing that intent. Without that language, the family may face a guardianship case.

Buy-Sell Agreements and Trusts That Hold Business Interests

A buy-sell agreement sets the events that trigger a sale and the terms of that sale. Common triggers include death, disability, retirement and an owner’s departure. Those terms should line up with the owner’s will and trust.

For corporations, these terms can live in a shareholder agreement.

For partnerships, the statute sets a formula. Under Fla. Stat. § 620.8701, when a partner leaves without dissolving the partnership, the partnership must buy out that partner’s interest, but a partner who wrongfully dissociates before a definite term or undertaking ends is not entitled to payment of any portion of the buyout price until that term or undertaking is completed, unless the partner establishes to the satisfaction of the court that earlier payment will not cause undue hardship to the business of the partnership. The price uses the greater of liquidation value or going-concern value. Interest runs from the date of departure to the date of payment. A written buy-sell agreement lets owners see the terms before anyone leaves.

Many owners move LLC interests into a revocable trust. That step needs care. Under Fla. Stat. § 605.0602, a trust that is a member is dissociated once its entire transferable interest is distributed. Keep the operating agreement, company records and beneficiary designations consistent with the plan.

Estate Tax Planning Coordinated With Business Succession

Estate tax planning and succession planning work best together, because a business interest can make up much of an owner’s estate. Under IRC § 2031, the gross estate includes property wherever situated, valued at the time of death. Where unlisted stock cannot be valued from bid and asked prices or sales prices, because it is not listed on an exchange and has no sales, its value is determined by taking into consideration, in addition to all other factors, listed stock of corporations in the same or a similar line of business.

Timing matters. Under IRC § 6166, when the decedent was a U.S. citizen or resident at death and an interest in a closely held business is more than 35 percent of the adjusted gross estate, the personal representative may choose to pay part or all of the estate tax in 2 or more equal installments, not exceeding 10.

The numbers also shape the plan. Under IRC § 2010(c)(3)(A), the basic exclusion amount is $15,000,000, and the statute provides for an inflation adjustment in the case of any decedent dying in a calendar year after 2026.

A revocable trust does not, by itself, keep a business interest out of the taxable estate.

If an Owner Dies Without a Business Succession Plan

Without a plan, the estate may need a court process to decide who handles the business interest. In Florida, the person who administers an estate is called the personal representative, often called an executor. Florida’s probate code sets out definitions that apply throughout the code.

Florida law generally bars corporations from serving as personal representative, under Fla. Stat. § 660.41. Certain Florida trust companies and banks may act, under Fla. Stat. § 733.305.

When an individual LLC member dies, that person is dissociated under Fla. Stat. § 605.0602. Co-owners then need the operating agreement’s terms to know their next steps. Company decisions can slow while the estate is handled.

Trust Counsel’s attorneys can serve individually as trustee or personal representative, and the firm advises and represents trustees, personal representatives and beneficiaries. The firm itself does not serve as a fiduciary.

Informal promises don’t solve this problem. Florida applies basic contract requirements to oral deals, as the court explained in St. Joe Corp. v. McIver. The DK Arena ruling also holds that promissory estoppel cannot enforce an oral deal the Statute of Frauds requires to be in a signed writing.

Asset Protection and Guardianship Planning for Business Families

Asset protection and guardianship planning help a business family keep control if an owner cannot act. Entity structure and trust terms should fit within a broader plan, not stand alone.

Guardianship is the outcome most families want to avoid. Except as otherwise provided under Florida’s power of attorney law, a power of attorney is durable, so it survives the principal’s incapacity, if it contains the words “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in chapter 709, Florida Statutes,” or similar words showing the principal’s intent that the authority is exercisable notwithstanding the principal’s subsequent incapacity.

Incapacity can also reach the company directly. In a member-managed LLC, the appointment of a guardian or general conservator dissociates the individual member, under Fla. Stat. § 605.0602.

Families with members or property in more than one country face extra paperwork. Trust Counsel advises domestic and foreign families, so documents for relatives abroad can be reviewed alongside the Florida business plan.

Speak With a Key Biscayne Business Succession Attorney

If you need to choose a successor or set buy-sell terms before a partner retires, start with a conversation about your options. Leslie V. Marenco is the lawyer responsible for this page.

If you’re deciding who will own and run your Key Biscayne business next, call (305) 707-7126 to book a free strategy call, or schedule online. The first consultation is free, confidential and carries no obligation to continue.