Estate planning for those with a family business can get complicated. The failure rates for these businesses are very high. They face a lot of potential issues that other companies do not have, and yet, they are also significant assets that may make up most of a person’s overall estate.
In doing your estate planning and succession planning, you may want to consider some potential trouble spots, including:
- People may have a stronger emotional investment and find it harder to make business decisions.
- When business decisions are made, they impact family members, sometimes in negative ways.
- Some family members may be more successful or may work harder than others.
- Events that are typically just family-oriented, like getting divorced or starting a second marriage, can have an impact on the company as well.
- Siblings may have a hard time working together or agreeing on who is in charge.
- The “dark” personality traits that often work so well in business tend to be difficult for family relationships.
Your exact estate plan can also cause some issues, if not considered carefully. For instance, are you picking someone to run the company because they are the best choice or just because of their birth order? Is the way you leave the company to your heirs going to cause resentment? Do any of them actually want to run the business, or would you be better off to sell it and just leave them the money?
These are all important questions that you need to ask, and you also need to take the time to look into all of your legal estate planning options.