Maintaining a healthy relationship with the people you love can be difficult when you also want your business to thrive. I have the advice you need to be successful at both.
I work with a lot of family-run companies and have been seeing many of them run into the situation where the parents have not properly planned for the transition of their business to their children after they pass away. This creates conflict among the siblings that are left behind because the parents did not complete the necessary work prior to passing.
When you think about all the time and effort you have put into building a company, why would you not set it up properly so that it passes hands smoothly?
Imagine the following scenario: A couple has been running a business together for 30 to 40 years, and, over that time, their company’s net worth has grown significantly. Of their four children, only their youngest has been working alongside them in the business, while the other three have chosen separate career paths. However, things change when the couple pass. At this point, the three, previously uninvolved, children try to step in and reap the rewards of the company’s success.
“The best way to ensure that your children want to stay a family is by having these plans developed and worked out ahead of time.”
This is a common problem when family-run companies are passed down. Even if one child has a clear right to the business, like in the scenario I just outlined, the other children may disagree. Suddenly, children who previously had no involvement with a business may show interest in either growing or selling it. It is essential that parents who own and run a family business prepare clear plans for the company before their passing. If they don’t, their children may have a hard time agreeing on how to proceed. Additionally, such disagreements can be exacerbated when the children’s spouses get involved. Each child and, by extension, each of their spouses, are likely to have varying opinions on how (and by whom) the business should be run.
If you don’t have a plan for your family business after you pass, you will leave a mess behind. This planning could include moving stocks into a trust, structuring a buy-sell agreement with one particularly involved child, making executive plans to keep the management team around while transitioning from one generation to the next, and more.
Also, if only one child has been involved in the business previously (as in the case of our earlier example) parents can take out an insurance policy that will allow that child to eventually take full control.
We can help you develop a plan and build a presentation that will explain your intentions for the business. This kind of preparation will make sure that your children are treated fairly, that your business is well taken care of after your passing, and that, after you’re gone, your surviving family will remain close to one another.
Don’t put off making these plans. It’s never too early to settle your business’s future.
If you have any questions, please feel free to contact me. I look forward to speaking with you soon.