If you own a family business, you are facing one of the most difficult issues in planning your estate. Not the tax issues — those are easy to handle by comparison, but the family dynamics surrounding to whom you are leaving your business.
Often, you — the founder — will have a very different view of the business than do your adult children — the future beneficiaries.
- To you, the business may represent the heart of the family legacy; to your children, it may be unimportant, or even an outmoded and unwanted burden.
- There may be some children involved in the business, and others not involved; how do you ensure that all are treated equally?
- Suppose one or more of the children not involved in the business wants to become involved — or the child or children in wants out?
- Maybe the time has come for the business to transition to professional or employee management — although you just cannot imagine giving up control.
- Perhaps a sale to a competitor or even liquidation is the right move; how will you feel to see your life’s work on the auction block?
These are just a few of the situations that can cause difficulties in arriving at a plan which meets your family’s needs. You can see why the statistics show that only about 30% of family businesses survive through more than one generation, and only about 10-15% make it through the third generation.
How do we estate planners address these problems?
Sometimes the wishes and intentions of the children coincide with those of the parents, and all is straightforward.
Sometimes a family meeting is all that is necessary.
Sometimes a family retreat with a trained psychologist specializing in family businesses (or even repeated counseling sessions) is required before we can iron out the difficulties.
Have a question on estate planning? Contact Mitchell R Miller.