The journey as a Florida business owner is not just about building a successful venture; it is also about creating an enduring legacy. An individual may have worked hard to create a profitable business and ensuring that it extends beyond their lifetime requires a thorough estate plan. Every business owner’s estate planning journey will be different, but there are some tools that can help anyone safeguard their interests. Learning about Powers of Attorney and Trusts can help a person safeguard their business and secure its financial future.
A Power of Attorney (POA) is a legal document that grants someone (the agent, or attorney-in-fact) the authority to act on one’s behalf in specific matters or situations. There are several variations of POAs that can be customized to fit particular circumstances. A Durable Power of Attorney is essential for business purposes.
When a Power of Attorney is made durable it means that it stays in effect even if the principal is incapacitated. Like other POAs, the principal can appoint a trusted individual or group as agent(s) to make decisions or handle business affairs as outlined within the POA document. This is especially helpful if the said person is unable to manage day-to-day business due to illness, injury, or extended periods of absence.
As with all POA documents, a Durable POA is highly beneficial to people who want to make sure activities, businesses, etc., continue running smoothly without them. In the context of a business, one has the flexibility to define the exact scope of the agent’s authority, so the principal will not have to worry about major changes without their say. A principal will be able to maintain control over vital business decisions even when they are unable to be present.
A Trust is a legal arrangement in which a grantor enables a trustee to hold and manage assets on behalf of beneficiaries. Trusts are versatile estate planning tools that can be adapted to serve various purposes. They are commonly used to protect such assets as life insurance policies, real property, or manage charitable contributions. Many Florida families use them to simplify business succession.
A Revocable Living Trust is a common choice for business owners looking to secure the future of their business while keeping control during their lifetime. In this type of Trust, the business owner can serve as both the Grantor (creator of the Trust) and the initial Trustee (manager of the Trust assets). As the Grantor and initial Trustee, an individual will retain full control over the trust assets and can continue to manage the business as usual.
As with a POA, the Trust document should clearly outline the plan for business succession after the Grantor’s incapacity or death. The successor Trustee, who could be a family member or business partner, can then take over managing the business following the Grantor’s wishes.
One of the significant benefits of using Trust as part of a business succession plan is that it can be passed on to beneficiaries privately and without the need for the time-consuming and sometimes costly probate process. Predetermining succession will allow a smooth transition of ownership, which will enable the business to continue operating effectively. The Trust may also provide asset protection that may safeguard the business from potential debts and liabilities.
Proper estate planning is not only about protecting personal assets, but also preserving the future of a business.
The foregoing is a brief and general overview of the use of Powers of Attorneys and Trusts for a business asset in Florida.
If you have any additional Questions regarding the foregoing or have any legal issue or concern, please contact the law firm of CASERTA & SPIRITI in Miami Lakes, Florida.