The food service industry is a fast-paced, unpredictable, and wholly chaotic environment. As a restaurant owner, you have countless responsibilities and moving factors to keep track of. Your life is anything but calm, and sitting down to create an estate plan is likely the last thing on your mind. However, this should be far from the case. Restaurateurs put every ounce of energy that they have into converting their dreams into a reality, and ensuring the preservation of that is just another part of creating a business. Whether you started your restaurant from the ground up or own a few franchises, it is important to make sure that your beloved assets are placed into the appropriate hands in the event of your death or incapacitation.
Steps to Creating an Estate Plan as a Restaurant Owner
- Create an inventory of your assets and review contracts –– The first step to estate planning is taking into account any and all assets that help the business run. Whether those be real estate, contracts, equipment, intellectual property, or bank accounts, it is essential to include each piece in your estate plan. Franchise agreements can impose restrictions on future transfers, which hinders estate planning. Before signing a franchise agreement, it is important to keep your future in mind and negotiate future ownership transfer terms, if possible.
- Identify key individuals and successors –– One of the most essential steps in any estate plan is identifying trustworthy beneficiaries and trustees. These are the people entrusted with the task of settling your legacy or continuing to run the business after you pass. It is equally essential to impart the duty of medical power of attorney and durable financial power of attorney to someone that you trust. This ensures that in the event of your incapacitation, this person can make medical and business decisions for you to keep the restaurant running as smoothly as possible. In order to do this successfully, you must take into account all of your business partners, employees, and family members that could potentially be considered for the role. By taking care to assign and explain each important role, you are taking productive measures to ensure that your legacy is kept safe.
- Develop a succession plan –– How will the restaurant be transitioned into the hands of your successors? How will it be run? Who will do what? These are all questions that you can and should answer while you are building your restaurant estate plan. You can appoint different authorities to different individuals, for example, someone could be in charge of client relationships while another could be the decision-maker. In the restaurant industry, updated licenses are essential to the success of your business. Thus, it is important to remember to talk to your successor about a plan for how to renew liquor licenses and other permits. There are many ways to structure the transition of your business, and it is necessary to make an informed decision that you believe will yield the best result.
- Consider creating a buy-sell agreement –– If you have a business partner, it is important to consider creating a buy-sell agreement. Business politics can get ugly, and covering all bases is recommended. In the event that one of you passes away, the question is, how will their shares be divided up and sold? Figuring out any internal conflict and preempting any issues will benefit you and your families in the long term.
- Create an estate plan –– Now that you have gone through the motions of accounting for all your assets, consulting with family and partners, and developing a succession plan, it is time to craft your estate plan. It is essential that you use a knowledgeable and experienced attorney who can help you, your family, and your business get the best out of your estate plan.
- Continuously update your estate plan –– Once you have crafted your restaurant estate plan, you may think that you are done, however, that is not really the case. Life is full of unpredictability and as factors change and your business structure evolves, you must continuously update your estate plan to include those changes. In such a fast-paced environment, having a dated estate plan is the equivalent of having no succession plan at all.
As a restaurateur, you have worked tirelessly to create success for yourself and your family. You know a thing or two about unpredictability, and you also probably know how good it feels to have control over what happens. An effective estate plan can help you protect your hard work and ensure continuity for your beloved business while giving you some peace of mind in your daily activities. If you have any further questions or are ready to start your estate planning journey, please contact the Law Office of Inna Fershteyn at (718) 333–2394.