Much of succession planning is about the wants and desires of the founder and their heirs. To start any succession planning, the family must come together to decide what the future of the business looks like and the roles each of the family members will have over time.
Then, the next step is deciding how to accomplish those goals, whether it is through a trust, a gift, an inheritance or a sale.
With that road map in place, it will be time to update all of the company documents to ensure they clearly show all the changes to ensure there are fewer issues during the process.
Unfortunately, too many small businesses are not ready for succession.
A recent report from U.S. Bank shows the issue clearly.
“Owners may want help navigating the succession planning process as nearly two-thirds (62%) find the process of succession planning overwhelming. Well over half (56%) worry they won’t get a reasonable price for their business when it’s time to sell, and roughly half (53%) say they lack the proper resources or guidance to plan for the future of their business.”
While the process may seem overwhelming, a great team of advisors can take care of the technical issues, like updating company documents, for the founder and their heirs.
The attorneys at The Orlando Law Group specialize in helping businesses structure their succession planning in Orlando, Sanford, Winter Garden and Kissimmee and are here to help set up the tools and programs that can keep your company running for generations.
Documents that need to be changed first
As a company’s founder and heirs start to prepare to implement the transition, there are specific documents that need to be changed. They include the following:
- Any articles of incorporation. In Florida, the structure of a business is laid out with the Department of State’s Division of Corporations. Any change to the ownership structure, like putting the business in a trust or adding members, needs to be shown on the annual reports filed with the state.
- Bylaws for corporations or operating agreement for limited liability companies. These are the documents that guide the business on how it is operated. If successors are entering the business at any time, these must reflect who makes decisions and how disputes are resolved.
- Shareholder, partnerships and buy-sell agreements: these all define what happens when an owner retires, dies or exits. Without it, heirs may inherit but not know how to exercise their rights or may be forced to sell under unfavorable terms.
- Minutes & resolutions of the board or its members: When the decision is made to transfer ownership, it is essential to have it in the company records. Putting a formal resolution together clearly shows the intent of the business in the succession plan.
Documents during the transition
As the transition starts, there are other key items that must be updated to protect the business from any disputes or other legal issues. The documents include:
- Business valuation report: Any succession plan needs to have the baseline of what the business is worth. This report sets the fair transfer price, establishes the estate and gift tax values, and ensures heirs who don’t get the business are treated fairly. Plus, without a valuation, the IRS can challenge numbers.
- Shares of the company: The shares are the literal proof of ownership for the company. As such, new shares must be issued to successors, and old certificates must be canceled. If they are not updated, disputes can arise over who truly owns the company.
- Ownership Ledger: This is the record of the percentage of ownership as it changes over time. Every time shares of a company change hands through a sale or a gift, this ledger must be updated. Failing to do so is often a trigger for IRS audits of companies.
- Loan agreements & guarantees: If the company’s founder has any loans that they have guaranteed or that the company has taken, those must be changed. This is particularly important as lenders have the right to call for the loan if the successors are not approved as guarantors.
Ongoing documents needed to be updated.
After the succession is complete and the new ownership is in charge, many of the company’s documents must be updated to reflect the new ownership, and it is more than just changing the signatures on contracts.
Some of the documents that must be updated include:
- Executive employment agreements: These should be looked at for everyone, across the board, including the new ownership. These documents give everyone a clear understanding of their roles and who they report to in the company’s new structure.
- Non-compete & confidentiality agreements: Of course, any family member should keep company secrets confidential, but it is better to be safe with updated agreements that protect the business.
- Key personal insurance policies, like life insurance: Insurance can be a critical piece to ensuring a company stays in business in the future, so if a company doesn’t update beneficiaries and who is covered, there could be significant issues down the road.
- General business insurance, i.e, liability, property and umbrella insurance: It should go without saying that if the ownership of the company is not updated, claims could be denied, and the successors could be on the hook for significant damages if sued or need a claim for things like hurricane damage.
- State & industry licenses and permits: If your business requires a license or a permit to operate, like a liquor license or a building permit, those should be updated to reflect the new ownership of the business, or the business could be shut down and subject to legal penalties.
- IRS & tax filings: An accountant should be able to take care of this, but any ownership changes should be reflected in IRS records.
The attorneys at The Orlando Law Group help with all types of legal issues for business owners and individuals in Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout Central Florida.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation to discuss your case. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.
Last Updated on October 7, 2025 by The Orlando Law Group
