Estate planning often requires that testators make a number of challenging decisions. They have to choose who to name as beneficiaries and what each of their beneficiaries should inherit.
Making decisions about particularly valuable assets can be a challenge, especially for those with large families or unique resources. A business owned and run by the family can easily trigger probate conflict if the current owner doesn’t make appropriate estate planning moves long before they die or become incapacitated.
They may have to choose who inherits their company, depending on their circumstances. How can testators make that decision effectively?
Every family business is unique
In some traditional cultures, the oldest child (or oldest son) in the family receives the largest inheritance. Other times, the factor that may guide the decision about future leadership is the interest an adult child has expressed in the business.
Sometimes, it is clear that there is one person who should run the company. Testators who plan carefully can leave appropriate inheritances for other beneficiaries while ensuring that the right person inherits and manages the business.
Occasionally, it may be clear that no one family member is truly in a position to properly run the business. In such cases, the current business owner has several options available to them.
They could name multiple beneficiaries as co-owners. They could also create a business trust. They can name someone to serve as trustee while ensuring that specific beneficiaries receive profits from the company when it is successful.
The nature of the business, the size of the family and many other details influence the most appropriate means of choosing who inherits a company and how to pass an ownership interest through to the next generation. Consulting with an estate planning attorney who also manages business law matters can help those who run family businesses preserve the company for future generations accordingly.