2) Instructions and Final Wishes
3) Personal Possessions of Emotional Value
4) Financial Assets and Real Estate
With this framework in mind, it is now time to look a little more closely at what it means to actually pass a family business down to the next generation of caretakers. Please note that the following contains ideas for your future and guiding wisdom, but not firm legal advice. Consult with an attorney before making any legal decisions.
Building Trust, Building Responsibility
However, if you’re looking to pass your business onto your children and support their futures, consider putting your business assets into a trust. Monitored, maintained, and executed by a third party, this option allows your financial and business legacy to be accessible to your children once they reach a certain age, pay out consistently over a set number of years, or any number of other parameters for you to decide. This can also be an option for passing on your legacy to children who may not wish to be as hands-on with the business in your absence.
So far, we’ve covered options for retirement. But what if we’re really looking ahead to the future, or to the worst-case scenario? Any business owner should understand the importance of crafting a strong will in the case of untimely death, and a big reason in doing so is to ensure as smooth as possible a transition when it comes to your business. Simply leaving your business assets to a family member or loved one in your will is an option, but these assets can then be used to pay off any of your personal debts that may exist. If you want to ensure that your business can continue to move forward (and not take on addition burden), a trust (as discussed above) may be a reasonable decision for your will.
It can be daunting to start to really drill into the specifics of passing on a business, as even the smallest operation can be mired in tricky details and overwhelming options. Perhaps the most important lesson is a more general one: Keep communicating openly and honestly with your children or family members every step of the way. Make sure nothing is a surprise, and integrate your personal values into every decision. If your children are buying out your business, make sure you’ve discussed your vision for the business, both financially and philosophically, so they can keep it running smoothly. If you choose to set up a trust, it may be important to instill a sense of purpose and philanthropy in your children, so they don’t become spoiled living off your legacy.
For detailed advice on how to leave your legacy and pass on your family business fairly and smoothly, contact Hubler for Business Families today to set up a free orientation meeting with Thomas Hubler, the expert on family business planning.