Owning a family business can be very rewarding, but it can also lead to some difficult decisions as you approach retirement. One of the most difficult decisions is deciding who will manage the business after your retirement. Family relationships often complicate the decision because many family members are not comfortable discussing financial affairs and mortality.
No matter how difficult it may be, succession planning should be a priority for any business owner. A large percentage of family-owned businesses fail to survive the transition from one generation to the next. Developing and implementing a well-designed succession plan is essential to the survival of a family business.
There are several questions you should ask yourself:
- Are you going to select a family member to take over or will you sell your business?
- Who's going to manage the business after you retire? Management and ownership are not always the same. You may choose to select one family member to manage your business but divide ownership equally among several family members.
- How can you limit tax consequences? The tax burden when transitioning a family business can be significant. Typically, a family business is not a liquid asset. However, taxes may be due when ownership is transferred.
- How do I keep the transition fair for everyone involved? We can talk with each family member to in order to understand what they believe is fair.
Once we understand your position on the issues above, we can help you construct your succession plan while focusing on what's important to you.