Family businesses have always been a part of the American economy, but they gained significantly more traction after the 2008 recession. Widespread layoffs and rapidly developing internet marketplaces combined to provide the perfect opportunity for families to try something new: creating and selling products and services online. The impact of family businesses is even recognized by Fortune 500—over 30% of America’s top companies are family-owned and operated.
If you are the owner of a family business, you may be thriving—but you also might wonder what will happen to your company when you are no longer around to manage it. Plus, with higher divorce rates and a shift away from tradition, the family business may be more complicated than it would have been in previous generations. Fortunately, you can take steps today to prepare your business (and family) for tomorrow.
5 Crucial Steps in Family Business Succession Planning
A succession plan is more than simply deciding who will take over when you retire or pass away. If you want your business to continue to flourish for years and even decades to come, your succession plan needs to anticipate a variety of potential obstacles.
The following 5 steps will help you create a thorough and strategic succession plan:
- Decide what you want for your family’s future. Setting goals and objectives is the first step in creating any plan. This may involve setting up retirement accounts, discussing what each of your family members sees for their future involvement in the company, and creating plans for their personal and professional development.
- Decide what you want for your business’s future. You may want your business to continue to grow, but what exactly does that mean? Do you want it to expand in size, services, or both? Do you want it to remain within the family, or would you like to hire outside professional management? Do you see it becoming involved in the community? You may benefit from professional advisement during this process.
- Create the succession plan. Identify who will take control of the company when you retire or pass away. You will need to select managers as well as owners, and each of these has its own legal and financial implications. Answering these questions today will likely give your successor(s) ample time to prepare for the anticipated responsibilities. For example, if you decide your child is the best fit, you can now spend more time training them for the role and teaching them everything you know.
- Outline the steps for the transition. How exactly will you transfer your business to your successors? Will it be through purchase or as a gift/inheritance? What is the timeline for this process? You may want to transfer responsibilities in a step-by-step manner rather than all at once.
- Establish a business-specific estate plan. Like you would with any estate, you will most likely want to consider how to avoid excessive taxes and the hassle of probate. For business owners, certain types of trusts may benefit you more than others. Seek qualified legal counsel to help you develop an estate plan that will protect your business and family’s future generations.
You may run into unexpected obstacles, so taking these proactive measures as soon as possible is vital. If you handle these issues sooner rather than later, your family will experience a more efficient and stress-free transition.
Contact Our New York City Lawyer for Personalized Support
Your family business is likely of incomparable importance to you, so you may need to consider obtaining additional legal support to ensure you leave no stone unturned. At the Law Office of Robert J. Maher, PC, our estate planning lawyer has the foresight, experience, and attention to detail you need to best protect what you value most. Together, we will systematically prepare your family business for the future and pave the way for its continued success.
Call the Law Office of Robert J. Maher, PC at (646) 681-1977 today to schedule your initial consultation.