If you own a business, you should plan for its succession. Who will take over it after you die or are unable to run it?
A significant percentage of people pass their businesses to family members, in most cases, the children. If this is what you plan to do, here is what you should know first:
Do your kids want to take over the company?
You should determine if your children are willing to inherit the business. This is a conversation you should have with them before making major decisions. You may pass the company to a child who wants to travel the world or pursue other passions.
Some parents usually have a child interested in the family business work in the company while grooming them to run it. If this is your case and your child is willing to take over the company, this may be a great option.
But if none of your kids want to inherit the business, you can pick an external party to manage it, or you can sell it. Note that your children may agree to take over the business just to make you happy. Thus, it can take time and many conversations to make informed decisions.
Is the estate balanced?
If your business makes up a significant percentage of your estate (the company’s value is more than other assets), passing the business to one of your kids may lead to conflicts. You should find solutions to ensure a “fair” distribution of assets.
Passing a business to children offers many benefits as opposed to selling it or passing it to a non-family member. But it also has its challenges. Consider getting legal guidance to understand the steps to take.