Many business owners want to pass on the family business to their kids, but it’s important to remember that this should be a decision made after careful consideration. In the event that you are transferring it outside of the family, there’s no traditional approach that guarantees your success. The conversation about transferring the business should happen long before the new partner or partners is brought into the process.
Formalizing the relationship should be the next steps, and the basic business agreement like the LLC or partnership agreement can be the framework under which the discussions continue. You should set up an appointment with your estate planning and business succession attorney in advance so that there are no surprises and to ensure that you have covered all your bases in the planning process. There are a few key issues that will likely be decided when you pass on the business, such as:
- The division of income
- Who will own what business assets
- How labor will be divided in the new arrangement
- How business control will be allocated among key stakeholders
- How management decisions will be made
These are all important considerations. To discuss specific planning techniques for businesses and estate planning, send us an email at info@lawesq.net