One of the most challenging aspects of developing your estate plan is what you leave behind for your family. It is very difficult to determine who will get what and why. It’s even more complex when there is a business involved. Your estate plan needs to specifically address what happens with your business in the event you are no longer involved because of retirement, illness or death. Balancing your family dynamics with a sound business succession plan is no easy task.
The first thing to look at is the structure of the business. If it is a smaller family owned and operated business, then you may have already been grooming a family member (spouse, children, siblings) to take over when the time comes. That should make things easier when mapping your succession plan. However, there are still plenty of details to work out regarding ownership stakes for any family members and defining any new management roles.
Larger businesses and corporations are generally much more complex when it comes to succession plans and estate inheritances. You will have an ownership stake in the company that needs to be distributed to your heirs. Then, you probably have your leadership role in the company that needs to be filled. Your position may not necessarily be taken over by a family member, but rather someone in the company that you have identified and trained as part of your succession plan.
When it comes to transferring your stake in a business to a family member (or multiple family members), it’s always important to remember that management and ownership are not the same. This will be a key factor in determining both your estate plan and your business succession plan.
Here are some other succession planning tips that will help balance family dynamics and the future success of your business:
Illumination Wealth his here to help business owners with their estate planning and succession planning needs. To learn more about our services and to schedule your first no-obligation consultation with one of our leading financial advisors, contact us today!