Florida Business Succession Planning

What Happens to a Florida Business When the Owner Dies?

A common question I hear is, “What happens to my business if I die?” The default outcomes are rarely what owners want. A single-member LLC can be wound down if your heirs do not act fast, Florida law generally dissolves it unless your estate continues it within about 90 days. In a multi-member LLC, your death usually "dissociates" you. Your heirs inherit your economic interest (a share of profits) but not the right to manage or vote, leaving them silent owners beside your partners. Corporate shares pass through probate to your heirs. In every case, no plan means probate delay, a possible fire-sale, and disputes among family and co-owners.

The Tools That Fix It

Business succession planning is a coordinated set of moves, not one document. People ask me what a business continuity and succession plan is in Florida, and the honest answer is that it is two or three documents that agree with each other, the operating agreement or bylaws, the will or trust, and a buy-sell with money behind it.

• A buy-sell agreement. If you have co-owners, this is the cornerstone, deciding who buys an interest on death, disability, or exit, at what price, funded by life insurance so the cash is there.
• Your business in a trust. A revocable trust keeps the company running and out of probate if you die or lose capacity, while you keep full control during life.
• A directed trust. Lets the family keep control of a closely-held business by separating the people who run it from the trustee who holds it.
• A dynasty trust. Passes a business down for multiple generations with creditor and divorce protection.
• An updated operating agreement or bylaws. The transfer-on-death and successor-management terms have to match your estate plan, this is where piecemeal planning breaks.

And if the problem is not succession but the partners themselves (a freeze-out, a deadlock, money moving where it should not), that is its own body of law with its own page, Florida business partner disputes.

Passing It to the Kids

The hardest case is when one child works in the business and the others don’t. Splitting the company equally usually breeds conflict. The common fix is to leave the business to the child running it and equalize the others with life insurance or other assets, so no one has to sell the company to be treated fairly. Gifting interests over time, a family limited partnership, or a sale to the next generation can move ownership tax-efficiently, but the family conversation matters as much as the documents.

The Tax Side

Two tax rules do most of the work. A step-up in basis at death revalues the business to its date-of-death value, often erasing the capital-gains tax on a lifetime of growth, so inheriting an interest usually beats being gifted it. A married couple can even get a double step-up with a Florida community property trust. And valuation discounts plus the federal estate-tax exemption shape how much, if any, tax applies. We coordinate the structure so the handoff is tax-smart. One more trap hits S-corp owners. Your trust has to be drafted to keep the S election, or it can terminate the moment you die. Can a trust own S-corp stock? →

Frequently Asked Questions

Common Situations

The partner’s heirs. Two friends own an LLC with no buy-sell. One dies; his widow inherits his half but knows nothing about the business. A funded buy-sell would have let the survivor buy her out cleanly. We put one in place for the others before it happens again.

The family restaurant. A founder wants his daughter, who runs the place, to keep it, and his two other kids treated fairly. We leave her the business through a trust and equalize the siblings with a life-insurance policy, so the restaurant never has to be sold to settle the estate.

The 90-day window. A consultant dies with his single-member LLC in his own name, mid-contract with his biggest client. His wife assumes the company can simply wait for probate, but under Florida law a single-member LLC is headed for dissolution unless the estate acts to continue it within about 90 days, and in the meantime no one has clear authority to sign or get paid. The client moves on before the court does. A revocable trust owning the LLC would have put a successor in charge the day he died.

Sources of Law

• Fla. Stat. ch. 605 (Florida Revised LLC Act): §605.0602 (dissociation), §605.0701 (events causing dissolution; winding up of a single-member LLC). Trust ownership: ch. 736. Step-up in basis: IRC §1014. Buy-sell valuation: IRC §2703. (retrieved 2026-06-09)
• The will and the operating agreement: Tita v. Estate of Tita, No. 4D21-1828 (Fla. 4th DCA Mar. 2, 2022) (an operating agreement with a death buyout option and no successor clause did not override a specific devise of the interest, which vested at death under §732.514); compare Blechman v. Estate of Blechman, 160 So. 3d 152 (Fla. 4th DCA 2015) (an agreement passing the interest to the children at death did). Death of a member: §605.0602(7)(a) (dissociation), §605.0603(1) (transferee status), §605.0502 (a transferee’s rights), §605.0504 (the personal representative’s powers), §605.0701(3) (90 days with no member); §733.612(22) (the personal representative may continue an unincorporated business for 4 months from appointment). Read in full from the official opinion text and the 2025 statute text (retrieved 2026-09-03).

What One Florida Case Shows About a Will and an Operating Agreement

I build in the answer to the question a judge asked me once, because someone will ask it again. In a succession plan the question is which document wins when the will says one thing about the company and the operating agreement says another, and a Florida appellate court answered it in 2022 for a family that had to litigate in two states to find out.

In one case I have reviewed, a Florida man owned 39.5 percent of a family company that held two buildings in Utah. His wife owned another 39.5 percent, and three of their six children held the rest, 11 percent, 5 percent and 5 percent. In 2017 he signed a will that gave his share of the company to the son and daughter who held the 11 and the first 5, named those two as his personal representatives, left everything else to his wife, and directed that one son be treated as if he had died first. Years earlier he had signed the company’s operating agreement, and it said two things about a member’s death. The estate of a member who died would receive only the right to distributions, with no vote, unless a majority of the other members admitted the heir as a member. And the company could, at its option and within 180 days of the death, buy the dead member’s interest from his estate. After his death the Florida probate opened in 2018, and his wife and the son he had written out went to a Utah court and obtained an order that the company had exercised its option to buy his share. Then, in the Florida probate, the wife argued that because the company had bought the share, the gift of it in the will had failed, and the buyout money fell into the residue of the estate, which was hers.

The probate judge in Broward County ruled against her, and in March 2022 the Fourth District Court of Appeal agreed. The gift of the company interest had vested the day he died. The operating agreement gave the company a right to buy that interest from his estate, and it said nothing about who was to receive the interest, so it never overrode the will. The buyout money went to the son and daughter he had named (the gift held, at the price of a Utah lawsuit, a Florida probate fight and roughly four years).

In reading that opinion, I have a few take-home points.

The first is that an operating agreement can override a will, and the one in that case lost to the will only because of what it left out. The same court had held seven years earlier that an operating agreement which says a deceased member’s interest passes immediately to his children takes that interest out of probate and out of the will entirely. The agreement in the 2022 case said the company could buy the interest, and nothing about where the interest went, so the will controlled. Practice pointer. I write the death paragraph of an operating agreement and the business paragraph of the will at the same sitting, and I make them say the same thing, because an owner who signs them years apart is leaving the question of which one wins to a judge.

Second, a death buyout option belongs to whoever runs the company after you are gone, and that may be the people you did not favor. In that family the wife and the disinherited son were the ones who went to court to establish that the company had exercised the option, against the two children who were supposed to get the company. Practice pointer. Before signing any buyout clause, an owner should work out who will hold the company’s votes the day after his death, and decide whether he wants his heirs to end up with the company or with a check, because the clause decides that and the will cannot.

Third, a gift of a company interest is a gift of whatever the agreement lets the heir keep. Under Florida’s LLC act a member’s death dissociates him, and his estate holds only a transferee’s right to distributions, whenever the surviving members choose to make them, unless the agreement or the members admit the heir. The son and daughter in that case were promised 39.5 percent of a company and spent four years over the proceeds of a sale they never chose. Practice pointer. If the plan is for a child to run the company, the operating agreement has to admit that child as a member on the parent’s death, in so many words, and the buy-sell has to be funded so that the other owners are paid rather than left holding a claim.

Avoid a will that gives away a company interest while the operating agreement gives the other owners the option to buy it, because the two documents send the same asset in two directions and the family finds out which one wins in court. What the right pair of documents would have done for that family is short to state. An operating agreement that named the son and daughter as the successors to his interest, with the wife’s and the other children’s consent written in while everyone was still on speaking terms, would have moved the share to them the day he died with no buyout, no Utah order and no Florida appeal, and a will that said the same thing would have had nothing to fight about. I quote that work, the operating agreement, the buy-sell and the will or trust that carries the business, as a flat fee at the consult, and the consult itself is free.

The opinion does not say what the 39.5 percent was worth or what the company paid for it, and it does not say whether the son and daughter would rather have had the buildings than the money, so I will not guess at either. What it shows is the shape of the problem, which is an owner who wrote his wishes into one document and left the other one to a form.

Kevin D. Klagge, Esq., admitted in Florida since 2012. The case described above is a decision of a Florida court rather than a matter handled by this firm. Past results do not guarantee a similar outcome.

Updated on September 3, 2026. Reviewed by Kevin D. Klagge, Esq., Fla. Bar No. 99502. Attorney Kevin Klagge represents families, businesses, and international clients in estate and tax planning, business structuring, and international law, with a focus on Florida legal tools. He litigates estate and business issues in court. General information about Florida and federal law, not legal or tax advice, and no attorney-client relationship is created. Business succession depends on your entity, owners, and family. Do not send confidential information until we have agreed to represent you.