The business world is changing, and that can impact a family's succession plan. When much of the family's wealth is tied up in a family business, getting it right is important. Here are three crucial topics to keep in mind.
1. Lines of succession should be clear.
Sometimes, employees do not know who is really in charge. An adult child may start gaining more and more responsibilities, but their parent may never actually retire. Multiple children may all work for the company, making it hard for employees to know who to listen to when they get conflicting instructions.
2. Daughters are taking over more businesses.
The classic business name of "Last Name and Sons" is changing. For a long time, sons tended to join or run family businesses, but daughters would not. Modern trends are reversing that course. More and more often, it is the daughters who step in and run these businesses. In cases with multiple siblings, this could mean more people want to get involved than with previous generations.
3. Children sometimes lack motivation.
When their parents started a business, they were motivated. It was their dream and their income, and they had to make it work. Their children, on the other hand, may have grown up with money and not feel as inclined to pursue the business. It's not their dream. If they do not have the same level of motivation, can they really sustain the company's success when their parents retire?
All of these topics bring up a lot of questions and potential succession issues, all of which people need to consider carefully while doing their estate planning.