I recently attended a forum for the Family Business Alliance and heard a startling fact about family businesses that is also apparently true in our area. 80% of local family businesses want to transition to the next generation. But, only 20% have a succession plan. This is problematic and in particular when family businesses make up such an important part of our economy and philanthropy to charitable as well as religious organizations.
I find that family businesses can get a lot of momentum in this process if the current generation starts with doing or updating their estate plan (such as setting up wills, trusts, and powers of attorney). Many of the questions and issues that are talked about in putting together an estate plan are critical to a successful succession plan. For example, who will run the family business when the current owners are not able to? Will the business be owned equally by the children or will one child have majority control? Will the next generation own outright the business interest (i.e. stock or an LLC interest) or will it be held in a trust for protection?
Succession planning is vital for the survival of a family business. It also takes time and is something that occurs over time. But, it can effectively begin with an estate plan. If I could be of any help with this process, please let me know. Thanks.
