As a family business owner, perhaps the most important part of your estate planning is doing business succession planning. You need to know how to leave the company to your heirs.
Now, perhaps you don’t want to leave the company to your children, or maybe they don’t want it. Even so, selling it and splitting up the assets and money that it generates is still a major part of your estate plan. Most of your wealth may be tied up in that company.
Let’s assume that you do want to leave them the company intact, though. Here are a few tips that can help you:
- Don’t put it off. You don’t want this to be something you rush through at the last minute.
- Train your child for years. They need to know how to run the company. Never assume they know just because they’re in your family. Spend years preparing them.
- Consider what to do if you have multiple children. Do you split things up evenly? Do they all have different roles? Do you just leave the business to one child and other assets to the other children?
- Consider creating a strong leadership team. Who can you put around your child to make it easier for them to succeed?
- Talk about it. Communication is crucial. Never assume they want the company or that they don’t want it. Sit down and talk this out before putting anything in writing.
- Give your child practical experience. Their first day as the new CEO shouldn’t be a shock. Bring them on early and show them the ropes.
If you do this properly, the transition can go very smoothly. Make sure you know what legal steps to take.