You’ve always had an entrepreneurial spirit and a lot of drive – so opening your own business was always a goal. Over the years, you’ve managed to create a thriving company that you could easily see lasting for decades to come.
So, do you leave the business to your children? The answer may not be as easy as you think. Here’s what you need to consider:
3 questions to ask before you begin succession planning
Estate planning and dividing things up between the kids can be complicated even without a family business being involved. When there is a business in the picture, you need to take a very honest look at three issues:
- Do your kids want the business? Maybe you only have one child, or maybe you have three. Whatever the situation, your dream may not be their dream, so don’t operate on assumptions. You do not have to default to leaving the business to your progeny – and you shouldn’t if they aren’t interested.
- Do you need to leave the business to one and not others? If you only have one child, this may not be an issue, but what if you have two or three? Can they work together as co-owners, or will personality conflicts and childhood rivalries doom them to endless disputes? Is only one child interested in actually operating the business? If so, you may have to decide what’s fair to leave to each child, and who is best suited as your replacement.
- Do you really think it’s in the company’s best interest? Being your children doesn’t automatically confer the ability to run your company. If you think the leadership of the company should go to someone with more business acumen, you can still structure things so that your children retain an interest in the company that benefits them.
Fortunately, you don’t have to make all of these choices on your own. Learning more about your options for succession planning and estate planning and how they combine is the first step toward making good decisions.