In our most recent blog, we touched on the importance of ensuring your business has a thorough business succession plan in place. We went over the nightmare scenario of failing to secure your business succession plan and how it can leave your heirs or trustees to either pay business expenses out of pocket while the process plays out or make the tough choice to shutter the business altogether.
One of the most secure solutions to business succession planning is the Operating Agreement for your Limited Liability Corporation (LLC). These agreements cover a lot of ground for you and your business, including how the business is handled when you pass away or are otherwise unable to make decisions for the business.
Put plans in writing
While many states require that you have an Operating Agreement, Florida does not require them. However, it’s still smart business to have one and to put it in writing. You could have an oral or implied Operating Agreement and not even know it. Just imagine the issues this could cause throughout the life of your business.
Instead, a written Operating Agreement creates a paper trail to prove what your plans for your business are. When you put together a written Operating Agreement, you can define who has the authority to make business decisions while you’re still around and when you’re unable to make decisions due to death or incapacitation.
Immediacy
A written Operating Agreement will stand against scrutiny when the time comes for someone else to assume authority over business accounts and operations. This secures the business in the gap between your death/incapacity and the transfer of ownership.
The person(s) you chose to provide authority over the business will have immediate access to company accounts when the time comes. This prevents heirs from having to pay out of pocket because the banks won’t need additional time to verify the claimed authority.
Fills the gap in estate planning
Your Operating Agreement won’t supersede your estate plan. However, it will fill the gap between your death and the transfer of ownership. Estates can take months or even years to fully execute depending on the size of the estate. So, you need a business succession plan that fills that gap and protects your hard work and your successors.
An Operating Agreement fills that gap, allowing immediate access and control to your designee. However, if the designee in your Operating Agreement is different from the person you’ve chosen to assume ownership of your business through your estate plan then the Operating Agreement can eventually be changed. This means whoever assumes ownership of the company through your estate plan has the authority to remove the person you designated in your Operating Agreement or simply return them to their original role.
Your best bet in business succession planning in Florida is to work with an attorney to make sure your hard work is in the right hands. At Bryant Taylor Law, we help clients put business succession plans in place to ensure their legacies are secure. Schedule a consultation with our team and we’ll make sure your business and its future is on the right path.
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