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Is This Your Situation: Worried About Passing Value to Your Heirs

 

One reason people start their own businesses is to leave a legacy for their children. It is not always easy, however, to start a family business and expect your children to follow in your footsteps. It is essential to have processes in place for a succession plan and to educate your heirs on the value of your company.

Evaluate the following important tips:

  • Escape your comfort zone. Many small-business owners started their company because they wanted to be in control. But turning that company over to the next generation means giving up a lot of that control. All too often a former owner is surprised by and uncomfortable with the technological and process changes made by an heir. But time does not stand still, so it's important to respect that your successors want to be successful, too.
  • Understand risks. There are risks related to passing down the business to your relatives. You've set the bar high. Do your heirs feel they can live up to your reputation? Could this transition affect your relationship with your children in a way that would be irreparable? It is critical to have a succession plan in place that recognizes and addresses these delicate situations.
  • Have confidence in your legacy. Your legacy will be in good hands. This is what you've worked for your entire life. Your core values should remain an integral part of your business plan, even after you're no longer a part of the organization. You have to be confident that you've created a plan that allows your family to carry on your legacy as you intended.
  • Address conflict among siblings. Beyond business operations, it is critical to remember that family is complicated. In the case of a family-run business in which ownership is passed to one child, conflict between siblings may surface that  previously did not exist. Adult children who never expressed an interest in the business may feel entitled to a share, which may make it necessary to devise a process to handle conflict.

Passing on a family business isn't as easy as adding heirs to the company name. To address the many critical factors that require careful planning, work with a professional who can walk you through these issues. To learn more about creating a company structure that can lead to the success of future generations, call us today.

                                                 

 
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Katz Nannis + Solomon PC
Katz Nannis + Solomon PC
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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