While most estate plans have a good chance of success even if you do not inform your heirs of the details, the chances of success are greatly diminished if you are passing on a family business.
If you own a family business, it is not only vital that you plan ahead for passing on the ownership and control but that you also have a transition plan in place in order to increase the chances of a success, according to the Wills, Trusts & Estates Prof Blog “Preparing the Family Business for Succession.”
For the family business to thrive after the current owner passes away, careful plans must be made for who will be in charge next. Everyone needs to know who will be in charge on day one and, to make that transition go as smoothly as possible, it is important that the next leader knows what he or she is supposed to do.
Ideally, the next leader should be groomed for the role by taking part in the business on a day-to-day basis and making decisions about it sooner rather than later. Even if all that is done, it is important to plan for any contingencies that might occur. A secondary plan for succession should also be in place.
Should a family business be part of your life, it would be wise to meet with an estate planning attorney to increase your chances of a successful family business transition.
Reference: Wills, Trusts & Estates Prof Blog (Oct. 6, 2016) “Preparing the Family Business for Succession.”
