A family business is usually the largest asset in the owner’s estate and the hardest to divide. Succession planning decides who runs the business next, who owns it, and how family members who are not in the business are treated, and puts those decisions into documents that will hold up.
Deciding who takes over
Management and ownership do not have to go to the same people. A child who runs the business may need control, while siblings who do not may receive ownership without control, or other assets instead. The firm helps the owner work through the options and talks with the family when the owner wants that.
Documents that carry out the plan
- Changes to the operating agreement or bylaws for voting and non-voting interests.
- A buy-sell agreement among family owners.
- Trusts that hold business interests for the next generation.
- Coordination with the will and the rest of the estate plan so nothing conflicts.
Fairness among children in and out of the business
Equal is not always fair. The plan can balance a business interest to one child with life insurance, real estate, or other assets to the others, and can set the price a child pays to buy the business rather than inherit it.
Timing
The transfer can happen at once, in stages over years, or at death. Each has tax and control consequences, and the family’s accountant is part of the planning on the tax side.
Contact the office to start a succession plan.