If you own a successful family business, that success is likely the result of a lot of hard work, and it probably didn’t happen overnight. And if you enjoy running your family business, you’ll likely want to do so as long as you can. But there will come a time where you’ll want to retire. When that happens, you’ll want to think about what happens to the money you’ve made from the business already, as well as the money your business will make, whether it continues to be owned by your family or sold.
In addition to thinking about a succession plan for when you do leave, and protecting your family business assets in case of conflicts between shareholders, divorces, or other disputes, it’s important to think about estate planning in order to keep you family business legacy intact and to keep your assets from being depleted.
A simple will is good for transitioning assets like houses and bank accounts, but a will alone usually isn’t sufficient to handle the complexity of estate planning for a family business. By hiring a lawyer experienced in helping family businesses with estate planning issues, you can learn about the different options available to you, as well as the advantages that each provide.
Working with a lawyer to set up a trust is one option toward providing for family members while preserving assets. A trust is a legal relationship where assets (such as shares of the family business, or proceeds from the sale or a family business) are held and managed by trustees (you, your spouse, and/or other trusted family members or friends) for a group of beneficiaries (such as your children and grandchildren).
A lawyer can also help you determine the best plan for your specific situation. For instance, if only one of your children is interested in taking over your business, but you want your children to share in the value of the business, or to be treated fairly in the estate by receiving other assets, you can create corporate documents along with provisions in your will that accomplish those aims fairly and prudently. Your lawyer can also make sure that your business agreements are in sync with your estate planning documents.
It’s also essential to factor in taxes when you’re working out estate planning provisions. Without figuring out how tax laws affect the plans you’re considering for distributing assets, you can’t fully determine which avenue will be most advantageous. A lawyer experienced in estate planning, working with your accountant in a holistic approach, will be able to incorporate tax issues into weighing the possibilities for you and your family.
By taking the time to work through estate planning with an experienced lawyer, you’re creating a foundation for future generations of family members to succeed – but you’re also making sure that the success you’ve built with your family business to date, and the rewards the business has provided you and your family, remains under your guidance and judgement.