If you have a company that you have built up and that you hope to pass down to future generations, it is very important that you understand family business succession planning best practices. You do not want to make mistakes that could jeopardize or undermine the easily and effective transfer of your company to new owners as problems could potentially harm the ability of the next generation to continue the success of the company.
Frank & Kraft can provide you with personalized one-on-one help with your business succession plan. You should give us a call as soon as possible for advice from our compassionate and knowledgeable legal team on family business succession planning best practices.
Family Business Succession Planning Best Practices
Every family is different and there may be unique issues specific to your organization that you should address when making plans for the company’s future after you are gone. However, some of the common best practices that most owners of family businesses should take heed of include:
- Put your plans in place well before you need to: Many business succession planning tools — such as creating a Family Limited Partnership and transferring small amounts of company assets to family members over time — can tae time to use effectively. You want to be sure you allow plenty of time to facilitate the transfer of your company before something should happen to you.
- Address more issue besides your death: Many people think about what will happen to their business after they die — but you also need to consider disability, divorce, or simply deciding that you have had enough of running the company and are ready to hand it off to your children or other younger relatives. A good business succession plan will provide plans for any type of situation where you may need to step away from the company and let the next generation take the lead.
- Choose the right business structure: Sole proprietorships are often very dependent upon the person operating the business for the company to be successful. Because there is no separation between the company owner and the company itself, handing down the business can become more complicated. You might wish to consider alternatives such as incorporating your business so you have stock to hand down to your loved ones.
- Make sure everyone is on the same page: You don’t want unpleasant surprises or family fighting to interfere with operations after you are gone. Talk with your loved ones about who will take over the business if you become incapacitated or must leave the organization.
- Use the right tools to transfer the company: You want the ownership of the organization to transfer quickly and for new owners to take control right away when necessary. As a result, you should likely work with a family business succession planning lawyer to ensure you’ve chosen a quick method of transferring the company. If the transfer of the business gets tied up in probate, which could take about a year, the uncertainty and delay in new owners taking over could undermine business success.
- Be aware of estate tax: If you have a valuable company, you need to be aware that your ownership interest could trigger estate tax. Talk with an attorney about how this can be avoided.
Frank & Kraft can also help you to identify any specific issues that could exist due to the nature of your business or family dynamic and that could warrant a different approach to business succession planning.
Getting Help from a Family Business Succession Planning Lawyer
A family business succession planning lawyer at Frank & Kraft will assist you with making certain that you take the right steps — at the right time — to facilitate the transfer of your company to your loved ones. You have worked too hard to build a business not to see the company become a success and survive long after you are gone — but to ensure that the business continues to be built by the next generation, you need the right business succession plan in place.
Frank & Kraft will guide you through the family succession planning best practices and will help you make use of the tools that you need to transfer your company quickly and cost effectively. To find out more about how our firm can help with business succession planning, join us for a free seminar. You can also give us a call at 317-684-1100 or contact us online at any time for personalized help and advice.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.