Client Alert Summer 2000 - Will Your Family Business Survive You?

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Client Alert - Summer 2000

Will Your Family Business Survive You?

Passing a family-owned business to the next generation can be rewarding. With proper planning, business owners can enjoy a comfortable retirement, secure in the knowledge that their children will prosper from the thriving business they are leaving behind.

Unfortunately, most business successions don’t happen that way. Two out of three family businesses don’t survive passage to the next generation. The ones that succeed usually share this trait: the business owners recognized the need for planning for their departure and allowed enough time to carry out their plan.

Elements of a successful succession plan should include an estate plan, a management-continuity plan and a financing plan.

An estate plan can ensure an orderly transfer of the business to family members and should provide for meeting the estate tax liability that comes with it. Estate taxes can reach as high as 55%. The estate plan can also include steps to reduce this tax liability.

A management-continuity plan can identify successors and ensure their training. If several family members are involved in the business, their various skills and levels of participation should be addressed.

A financing plan can ensure that money is available to meet the conflicting demands of the family, the business and the government.

All parts of the succession plan should be tailored to the business owner’s situation. Early planning is essential for success. Contact our office if you’d like assistance.

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