Business owners who want to leave the family business to their children can create a business succession plan to achieve this. A business succession plan can be organized in many different ways. For example, it might not go into effect until after you die. Or, you might sell your business to your child or children, so you can enjoy your golden years without needing to be concerned about the health of your business.
Although they can be very advantageous for many families, a business succession plan will not be appropriate for all situations. As such, you might want to ask the following questions to get clear on the process before you decide it's right for you:
- Do you plan to transfer all of the business, or just part of it?
- Will you be transferring the business to one child or to all of your children equally?
- If some children won't be receiving a share of the business, will they be compensated?
- Will some children have more management control over the business than others?
- Should you transfer ownership to your children directly, or should you set up a trust that will house the business for the benefit of your children?
- Are you children prepared and willing to be involved in your business?
- How will you prepare your children if they are interested in owning your business?
- What kind of ongoing responsibilities for the business will you continue to assume, or will you be "done" and out of it once you have transferred ownership?
- How will you minimize the tax implications of the ownership transfer?
These are just a handful of questions that business owners should consider before creating a business succession plan. If you and your family would like to benefit from this process, a North Beach California business succession lawyer can help.
Source: Forbes, "Business Transition Planning: How To Leave Your Company To Your Children," Robert Pagliarini, accessed Aug. 09, 2017