Whether your goals include security for your family, confidence in retirement, or to establish a lasting legacy, a comprehensive legal strategy is essential to any successful business succession plan.


Oftentimes, we find that individuals have neglected to plan any kind of succession procedure prior to consulting a professional. It’s not too late. Proper business succession planning addresses both state and federal issues.

On a state level, it is important to execute the procedure in a manner that will adequately transfer ownership to your chosen designees, yet still retain the control that you worked so hard to establish.

On a federal level, there are numerous pitfalls of the Internal Revenue Code, which can either serve as a boon to the well-prepared or a harsh trap for the unwary. Ourednik Law Offices employs tax professionals who are always prepared to address all of your legal needs on both the state and federal level.

Preparing For Business Succession

Good Planning

Although many people believe that business succession planning begins when they are ready to sell their business, this is not actually the case.

Good business succession planning begins at the formation of the business, long before selling is ever a consideration.

There are several reasons this is true, including:

  • A business succession plan is part of the overall business plan, which is usually conceived at the beginning of a business.

  • The initial business formation stages are generally free of member, partner, or shareholder discord, whereas the ending stages can bring tension between the various members that make up the business.
  • An attorney is often present at the formation of a business and will usually advise the implementation of some sort of business succession strategy.
  • The formation stage of a business is where the governing documents of the entity (e.g. bylaws, partnership agreement, or operating agreement) are drawn up and the succession plan should be a part of this document.

Events That Trigger A Succession Plan

  • Death of an "owner" (member, partner, or shareholder)
    When an owner of a business dies, it can cause problems for the remaining owners of the business if there is no succession plan in place. An ownership interest in a business entity is personal property under Florida law and can be passed to the decedent’s beneficiaries or heirs as part of their estate and may also be used to satisfy creditors.

    The death of an owner can be particularly devastating for a business since death can often be difficult to plan for and can occur at a time when the business is not properly positioned to absorb such a loss. For these reasons, the well-advised business owners should plan for the possibility of the death of an owner when creating their succession plan.

  • Divorce of an "owner" (member, partner, or shareholder)
    The divorce of an owner can lead to similar consequences as the death of an owner. Since an ownership interest in a business is personal property under Florida law, these interests can be divided as marital property by a court in a divorce decree.

    With divorce rates nearing 50%, the divorce on an owner is a very real possibility that should be considered in the drafting of a business succession plan.
  • Sale of an ownership interest in the business
    One of the most important issues any business owner will face is the transaction that will arise when they seek to sell their interest in the business. Unlike the case with large publicly-traded corporations, there is often a limited market for the sale of an ownership interest in a small business. For this reason, a well-conceived business succession strategy is essential to small business owners.

    Oftentimes, the outgoing business owner wants to secure benefits for themselves and their families, such as a stream of income or medical insurance. While the new purchaser wants control of the business immediately upon receiving ownership. Both parties may be understandably skeptical of whether these and other goals may be accomplished.

Tax Concerns

While often overlooked by the parties, an understanding of the tax consequences is vitally important when conducting the sale of any business. Some important consideration include:

  • How to structure the sale
    There are many important considerations when structuring the sale of a business. In most cases, the parties may agree to sell either the ownership interests or the individual assets of the business. Each method has different tax consequences depending on whether you are the buyer or the seller. The type of business entity involved is an important factor in the decision making process.
  • How to allocate the purchase price
    When selling business assets, the federal tax rate on gains can vary from 15% (long-term capital gain) to 35% (ordinary income rates). Sellers and buyers of business assets must reach an agreement on how to allocate the total purchase price to the specific assets transferred.
  • Payment
    Often, in the sale of a business, the seller allows the buyer to remit the purchase price over an extended period of time in a series of installments. In these situations, the seller may be able to defer the overall gain on the transaction until payments are actually received by the seller (along with applicable interest). Alternatively, when a buyer and seller cannot agree on a specific purchase price, it is sometimes provided that an up-front payment will be made and additional contingent payments will be made to the seller if certain milestones are met in subsequent years by the business. In either case, understanding the tax consequences of how to structure payment is an essential role of the business succession attorney.
  • State Tax Issues
    Besides the numerous federal tax issues that may arise, state tax issues must be considered as well. Depending on the structure of the transaction as well as the location of the parties, different states may be involved.

How We Can Help You

Plan The Future Of Your Business Now

Let Ourednik Law Offices help create a solid succession plan for your business.