You’ve built your business from scratch — and you have every reason to be proud of what you’ve accomplished. You know, however, that many family businesses struggle to survive the transition from one generation to the next. That makes advanced planning that ties your estate plan and your business succession plan together an essential process.
Here are some of the most important things that you need to consider when you’re making your plans:
- Who will inherit your place in the business and to what degree? If you have partners, your partnership agreement may provide guidelines, but do you remember what they say? If you have multiple children who would like to inherit the business, how do you decide who will move into which position?
- Will ownership and management of the business be two different things in the future? Sometimes, business owners will designate one child to manage the family business but divide ownership up equally among their heirs. What provisions do you want to make to protect the “silent” owners in the future?
- Should you transfer ownership and operation during your lifetime? This can help with the transition, make it easier to retain your key employees and smooth out a lot of the bumps in the road that come with these transition periods.
- What tax issues and probate concerns need to be addressed? It’s always best to keep the business out of probate, and you naturally want to minimize the company’s tax liabilities as much as possible after your death.
Setting up your estate plans when you own a business can be extremely complex — and a mistake could prove disastrous for your heirs. Make sure that you have experienced legal guidance from the beginning to the end.