At some point, every family business owner considers what will happen when they are no longer able to run their business. Will they be able to retire when they are ready and successfully pass on the business?
For this to happen, family business owners must identify specifically the result they want. Without a specific destination in mind, there is little chance a business owner will end up where they want to be.
Perhaps the biggest challenge is that most parents want to be fair to their children. However, when their children have different attitudes and interests about the business, it is very difficult for parents to define what is “fair”, let alone accomplish a fair result. However, if the parents can identify and prioritize the results important to them, there are often multiple options available to achieve these results.
Last column, I gave the example of a “land rich but cash poor” farm where one child wants to continue the farm but the other children have no interest. The situation could just as easily have been that all the kids want to continue the farm, or some number in between.
One option may be to use or create a family business entity. For example, if the farm operates as a limited liability company (sometimes referred to as an “LLC”), this structure can provide a vehicle for one child to be given control to run the farm; but all of the children can share in the profits.
This is just one example of how the structure of a family business can be effective, perhaps even essential, to accomplish family estate planning goals. When used in conjunction with a will or trust, remarkable estate planning solutions are available.
Come to a free presentation and find out how a few basic steps can make all the difference for a successful estate plan.