Estate planning can be difficult for any individual or family, but those with family-owned businesses can have particular challenges. It is a good idea for people with such businesses to discuss succession early and often, and to continue thinking about these issues as the business grows. For those just starting succession planning, here are some of the first steps worth taking:
It’s important to have some clarity for oneself before approaching other family members about succession planning. Is the end goal to pass the business onto the next generation, or to sell it? Does the owner want to retire out of the business, or be involved until they pass away? Talk to loved ones to get clarity on these goals if the answers are not readily apparent.
Naming who will take over the business is only the first part of succession planning. Owners should also do all they can to prepare those individuals for the job ahead. This includes training, establishing a process for decision-making and hiring additional managers to support the transition if needed.
Put it in writing
Decisions that are made regarding the future of the business should be documented as part of an estate plan. While many people aim to retire out of their business, untimely death can happen, and it is important that plans are documented in a legally sound way. A business is frequently the largest asset a person owns, so it’s important to include it in the planning process.
Family businesses can be extremely rewarding, but it is important to take care of them for the sake of everyone involved. Succession and estate planning are particularly relevant to prioritize to maximize the future potential of the business and continue caring for the family members involved. Those looking to create an estate plan that involves a business can find support from a British Columbia estate planning lawyer.