We are always learning from celebrities what not to do in estate planning. Business succession planning is so important for individuals who own a business and want that business to continue to operate after their death. Business succession planning can involve important issues such as who will have control of your business when you retire or die? Who will have ownership? It can also involve tax planning to minimize the taxes. Planning in advance can make the transition much easier.
Dale Earnhardt Sr,, famous race car driver who died in a crash at the 2001 Daytona is an example of how poor planning can have disastrous results.
Dale Earnhardt Sr. started Dale Earnhardt Inc., the company that ran his racing team. When Dale Sr. died, he left his business DEI to this third wife Theresa, not the mother of his children. Theresa became the owner of the racing team in which Dale Jr. was the principal driver. An interesting issue developed when Dale Jr. found himself not only not in control of the company but also not even having the rights to his own name. Apparently his father Dale Sr. had filed a trademark for his son’s name and Dale Jr. signed a consent to it. When Dale Sr, died, the rights to Dale Jr.’s name went to his estate and then to Theresa. Dale Jr. tried to negotiate with his step mother to gain some control of the company but nothing came of it and in 2007 Dale Jr. resigned to drive for another racing team.
It is hard to imagine that Dale Sr. would have wanted his son, who followed in his footsteps as a race car driver, to be shut out of DEI. Had Dale Sr. planned properly, a plan could have been created to give control of DEI to his son and still left plenty of resources for his wife.
Scott C. Soady, A Professional Corporation can help with planning for the succession of your business as part of an overall estate plan. Read about some of the points to consider in our article on Business Succession Planning and contact us to schedule a free in-office consultation.