Estate planning can become complicated when you're leaving behind a business. If that business is a family owned business, the complications can grow far more personal. Leaving behind a business isn't like leaving behind an heirloom. There's far more you must consider when passing a business along to your child or other dependents.
Understand that Your Business Is Still a Business
Your business isn't an object that you can give away with the belief or hope the next owner will take care of it. Leaving the business in the family is admirable, but you have to make sure that those you plan to leave it to understand and respect that it's a business.
Teach Your Beneficiaries Business Responsibilities Now
The person or people you plan to leave the business to need to understand the responsibility they're inheriting. If you're able, you should include them when you're making business decisions, even the decision to leave the business to them.
You'll need to gauge their willingness to even run the business. It's not always a given your next of kin will even want to run the business. You should plan for the future. Foster talent and fund training or schooling if possible.
Make Sure You Write It All Down
You can't pass along a business with a handshake and a hug. Every decision you make regarding the disposition of your business needs documentation. This becomes incredibly important if you have multiple children or others in the family, but are only leaving the business to one of them.
You should write down everything from the roles and responsibilities of family members in the business to the way the family will hire other family members. The more you have in writing, the less the possibility for confusion or infighting.
The new owner(s) may change much of this once they take the reins, but having it all in place will help make the transition easier. It will all serve to make your wishes for the business known, so there's no ambiguity. For example, you should establish guidelines that state what will happen if a family member dies or if there's a divorce.
Work out the Details with a Professional
Dealing with a family business can become an emotional and passionate ordeal. It's important to keep a level head when dealing with the disposition of a family business. If you want your business to last and stay in the family, you need to work with a probate or will attorney that can guide you and yours through the process.Share