When people are passing a family business onto the next generation, they often want things to be fair. They’re trying to avoid estate disputes, and they want to treat all of their children the same way. They think that this means making things equal, such as leaving three adult children as co-owners and business partners.
But some experts are quick to point out that the estate plan doesn’t necessarily have to be equal if it’s going to be fair. Say that one adult child has been living in the same town and working at the business, learning the ropes. The other two have moved out of state and have been working in other professions or attending college. Would it really be fair to give all three adult children equal shares in that business?
You can give them different roles
You may realize that it wouldn’t be fair to give everyone the same ownership percentage, but you may still want to leave a portion of the business to all three beneficiaries. You don’t want to cut two of your adult children out of the plan entirely.
One option that you have would be to give them different roles. Maybe one of your children is generally in charge of the day-to-day operations and runs the business. But the others are involved in marketing, outreach, employee acquisition, product design, branding or other areas of the company. When making a business succession plan, it is wise just to consider the different attributes that various beneficiaries have and what positions within the company would be best for them – and best for the business.
You can see that business succession planning can get complicated. Be sure you know what legal steps to take at this time.