As a business owner who is doing your succession planning, you may be thinking of leaving your company to all of your adult children. You think of your business as a legacy, and it also provides a significant amount of income. You want to pass the business to all of your children so that they can all have this financial benefit moving forward.
This is what most business owners do, but it’s important to note that you are not required to split up the business equally. You have the option to leave it to anyone that you want, including just leaving it to one heir and omitting the others. In fact, it can often cause problems to leave the business to multiple heirs equally.
Are they qualified?
One problem is that some of your heirs may not actually be qualified to run the business. You need to carefully consider the people that you are putting in positions of power within the company. What roles and responsibilities do they have? What education and training have they gotten to prepare for those roles?
After all, leaving the business to all of your children could cause personal disputes and could harm the business. Maybe your heirs believe they all need to work together to make decisions for the business, but they can rarely agree. Or perhaps you have one heir who went to business school and who is fully qualified to run the business, and they are often frustrated and feel held back by their siblings, who do not have the same background or abilities. Would it actually be better to leave the business to the person who is most qualified to run it, while leaving other assets to the other heirs?
Of course, every situation is unique. But it’s important to know that you do have options, and you need to consider them carefully.