If you are put under a conservatorship, a court-appointed person manages your estate, including your business. This means that you are presumed mentally incapacitated, incapacitated or missing.
How could I lose my business to a conservatorship?
Losing your business to conservatorship in Florida is essentially a two-step process. First, you become an absentee, and as such, a judge appoints a conservator over your estate, including your business. This is done without your consent or input.
Loss of control
Conservatorship means you lose control of your business. The conservator makes all business decisions, including selling your business, hiring, firing, expanding, contracting, etc. They have full authority, but their vision may not align with your business vision.
Loss of income
You also lose control of the income. The conservator is empowered to use the income to pay for your estate’s expenses and debts, including any taxes and fees, but you do not have any control of how they do that and who is paid, including your family. They can even sell your business to pay off creditors.
How can I prevent losing my business to a conservatorship?
The best way to prevent losing your business to a conservatorship is to create an estate plan now that avoids the state stepping in and appointing the conservator. This can be done through a durable power of attorney, which appoints someone you trust to act on your behalf, should you become an absentee. This can include taking over your business until you are no longer an absentee.
You can also create a living trust, which is a separate legal entity that would hold your business for your benefit during your lifetime. Then, after you pass, it would transfer your business to your beneficiaries. Initially, you can name yourself, but you can also name alternative trustees, should you become an absentee or die.
Another option is to create a buy-sell agreement with your co-owners, partners, family members, trusted employees, etc., who can buy your share of the business, should you die or become an absentee. It can have clauses that create funding options and how a sale would be triggered.
The key is to plan for what happens to your business now, before something happens. If you do that now, you will have to worry about waking up in the hospital later and learning that some randomly appointed conservator destroyed your business baby.