Estate Planning For Business Owners
Many business owners in Northeast Florida have significant assets but no estate plan in place or no plan on how to exit their businesses. This blog will focus on how to estate plan around your business and how to come up with a way to exit your business.
As far as estate planning for your business goes, a Living Trust is the best way to ensure continuity in your business. A Living Trust is a Grantor Trust for taxation purposes so it will qualify as a shareholder for an S corporation. A Grantor Trust is a trust in which the grantor retains certain powers over the trust (such as the ability to revoke the trust) so that all income is reflected on the grantor’s personal income tax return. For IRS purposes, the trust does not exist since everything tax-wise is reflected personally.
The Living Trust will say who is to take over as Trustee of the trust (owner of the business) should you become disabled or pass away. Once the trust is set-up, you will transfer your ownership of the business into your trust. For a corporation, that would be re-issuing new stock in the name of your Living Trust. If an LLC, you would re-issue your membership interests in the name of your Living Trust.
The reason a Living Trust is better suited for owning your business is for continuity of ownership. If you only have a Will-based estate plan, then your Durable Power of Attorney would control as to who can run the business. However, if your power of attorney is not accepted for any reason, then a guardianship would have to be set up to run the business. A Living Trust avoids all of these problems.
When it comes to leaving your business, there are only two ways: involuntarily or voluntarily. You really need to plan for both! Involuntarily means you leave via disability or death. Voluntarily means you leave when you want to via a sale to a third party, transferring the business to family or to key employees. Again, either way requires planning.
If your business transfer is through involuntary means, you can plan around it through a buy-sell agreement with your partners. What a buy-sell agreement does is if one partner becomes disabled or passes away, it forces the other partners to buy out that partner. This agreement is usually funded with insurance so that there is cash readily available for the transfer. If you do not have a partner, you may want to think about brining one in or training key employees so that if something happened to you, the business would not disappear over night.
If your business transfer is through voluntary means, you should answer the following questions to begin your planning:
1. How long do you want to remain in the business?
2. Who do you want to transfer the business to?
These two questions are vital to be able to plan for your exit of the business. If your answer to “when” is tomorrow, there is not much you can do. If your answer is 5 years, there may be some business restructuring we can do to maximize the value of the business and lessen the tax burden to you because of the sale. The “who” is just as important as the “when”. If to family members, you may want to legally lower the value of the business as much as you can. If to a third party, you will probably want to increase the value of the business as much as you can.






I was reading a recent article relating to baby boomers and their estate planning. Right off the bat the article gave a statistic that shocked me. One in eight baby boomers will get Alzheimer’s after they turn 65.
For most individuals, there are several documents that make up an elder law estate plan to avoid probate, protect assets from nursing home costs, keep belongings in the family, save estate taxes, and select people to make decisions if you are disabled. The main instruments of a plan are: a revocable living trust or irrevocable Medicaid asset protection trust, inheritance trust, “pour-over will”, power of attorney, health-care proxy. You may also leave funeral and burial instructions and final directives for your family to inform them about all your important information. A memorandum of personal effects asserts which personal effects are passed to beneficiaries. A new deed is created to change title if real property is being transferred to the name of the trust. While having an elder law estate plan is important, it is also important to make sure you have it reviewed at least every three years to maintain accuracy and legality.
You do not have to be rich or a celebrity to want your pet taken care of after you are gone. Estate planning for your pet has increased and at least 45 states allow for pet trusts. There are also retirement homes for your pets after you have passed away, as well as attorneys that specialize in pet trusts. There are resources available. Several books and websites have been dedicated to educate pet owners about setting up a pet trust. Some veterinary schools offer estate planning options like placement in a home or lifetime care for your pets. It is very important that the pet trust be written so that the funds and pets can be turned over to the designated facility or caregiver because the need is immediate. Some pet owners leave money to the individuals that will be caring for the pet to ensure the animal will not become a financial burden. However, greed sometimes gets in the way when a large amount of money is involved. Be sure to think carefully before deciding who will be the caretaker of your beloved pet.
It is shown by surveys that women still follow men when planning for retirement. It is very important for married couple to make retirement-planning decisions with the purpose of leaving the spouse with the longer lifespan in good shape financially after the other passes away. The surviving spouse usually suffers a permanent decrease in his or her standard of living. But the good news is that couple can take provisions to protect one another and be certain that either spouse is comfortable with managing the finances. However, 40% of married women rely on the husband to plan the retirement finances. One way to increase income for the survivor is to delay claiming Social Security. The longer you wait to collect your benefits, the greater the monthly payments will be which could help the surviving spouse. For those who have an annuity or are entitled to a pension, there are steps that can be taken to ensure the surviving spouse will receive a survivor benefit. Purchasing a life insurance plan is also helpful. It can help the surviving spouse pay down debt, cover medical expenses or help make up for the loss of the spouse’s Social Security benefit.
Most individuals believe that by drafting a will or a trust their estate planning is complete. Items that every estate plan should have are: a will/trust, durable power of attorney, beneficiary designations, letter of intent, healthcare power of attorney, and guardianship designations. The main aspect of an estate plan is a will or trust that should be written consistent with the manner you have given assets outside of the will to try and ensure that there will not be a will contest. To ensure that an agent or person can act on your behalf in the event of injury or disability, it is important to draft a durable power of attorney. It is also important to have a beneficiary on retirement accounts, insurance plans, and other accounts to ensure that a court will not be left to decide the fate of your funds. A letter of intent details what you want done with a certain asset after death or incapacitation and may also include details of a funeral. You should choose an individual to make important healthcare decisions for you in the event of incapacity and include this person in a healthcare power of attorney. You should choose a guardian if you have children or are planning to have children to ensure that the court will not become involved and choose a guardian you would not approve of.
An asset protection trust protects your assets against creditor attack, and there are a number of different methods to protect different categories of assets.
Change is a part of life – unfortunately, it is also a factor in derailing many estate plans that have not been updated to account for new circumstances.







For most people, ensuring that their assets are distributed according to their wishes is what drives them to visit an estate planning attorney in the first place.
The conservatorship process -- where someone is appointed by the probate court to assume responsibility for the property or the personal welfare of an adult -- is both invasive and expensive, and in effect represents the loss of that person's civil rights, usually on the grounds of mental incapacity. While it can be an effective tool for the protection of a vulnerable person's assets or physical well being, it can be one of the most painful legal procedures and should be used only as a last resort.
Quite a few couples that have elected not to wed may well believe that
On July 1, 2010, Florida adopted and passed legislation (§ 736.0902) that statutorily protects “qualified” trustees when handling irrevocable life insurance trusts (“ILIT”). The statute was passed because of a going concern that trustees were hesitant to fulfill investing fiduciary duties in fear of being liable to the trust or its beneficiaries.
Change is a part of life – unfortunately, it is also a factor in derailing many estate plans that have not been updated to account for new circumstances.
Victoria Duffy Hopper, the ex-wife of actor and director Dennis Hopper who recently passed away from prostate cancer, has filed a $45 million claim against his estate. At the time of Hopper’s death last May, he was involved in a bitter divorce battle and had reportedly drawn up a new 

Can you divide your estate in any fashion you choose and leave it to whomever you wish? In Florida, the answer is no.
Identifying the individuals who will carry out your wishes once you are gone or disabled is an important part of estate planning. There are several different roles to fill, including:




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Currently, the basis of property acquired from a decedent generally is the fair market value of the property on the decedent’s date of death. Property included in the decedent’s gross estate for estate tax purposes must be valued at its fair market value on the date of death.

