As a business owner who is doing your estate planning, succession planning is probably one thing that is on your mind. You could simply sell your business and then put the money that you earn into your will. But, if you want to pass that business itself on to your children, it takes some additional steps.
It is very difficult for family businesses to survive through the generations. As such, you may want to consider these tips to give your family the best possible chance and to make this go smoothly.
Put the children in qualified roles
Not all children are qualified to be the CEO or to make all the decisions. You need to decide what specific talents and skills your children have and give them roles that fit these skills. In some cases, you may also have to bring in outside talent if your children don’t have all of the skills that are necessary.
Define their duties
It’s also important to define the roles and responsibilities that these individuals will have with the company. This includes defining how much they should take for compensation and what ownership percentage they will have. You can prevent a lot of family feuds by making this clear from the beginning.
Work with them in advance
One more thing to keep in mind is that it’s wise to work with your children in advance and teach them the ropes on the job. Don’t just leave them the business and expect them to take over the next year or even the next month. You may want to bring them in years early so that you can train them and make sure that they are really ready.
As you get your plan in place, be sure you also know about the legal steps you can take and all of the options you have.