It is important to plan who will take over your business upon the unfortunate event that you pass on. To establish your business succession plan, you must identify the ideal heirs to take over your business and then determine the most suitable selling arrangement. Continue reading to learn how you can ensure that your business passes to your heirs and how an experienced Monmouth County, New Jersey beneficiary attorney at Margaret M. Mahon, Esq. LLC can help you in doing so.
How do I pass my business to my heirs?
Especially if you have children or family members working in your business, it is fitting to choose an heir as your business successor. It is fitting because it is a way to provide for your family even after you have passed on. With this decision, you must follow some steps to ensure that this is a smooth transition. These steps read as follows:
- Identify an heir: if you have a single family member that is already involved in your business, then it may be easy to designate them as your heir. However, this is more complicated if you have multiple family members that are involved and interested in taking over.
- Supply clear instructions: these instructions should specify who will take over your business and how your other heirs will be compensated.
- Think about a buy-sell agreement: this agreement will allow your heirs who are not active in your business to sell their shares to those who are.
- Consider the future leadership structure: if you have multiple family members involved in your business but only one will take over, then it may be helpful to specify how the leadership structure will look like moving forward.
If you do not follow this business succession plan accordingly, then you may leave your family behind with great complications. For one, if you do not establish a future leadership structure, your heirs may become confused as to what their new day-to-day responsibilities will be.
What are the drawbacks to passing down my business to my heirs?
When it comes to working with family, things tend to get more complicated. Some of the drawbacks of passing down your business to your heirs read as follows:
- A power struggle may arise between your heirs.
- Your heir may not be business savvy and decide to sell your business.
- Your heir may not be business savvy and cause your business to decline.
In any of the above circumstances, your business may not survive the transition to your heirs. So, sometimes it is best to sell your business to a co-owner, key employee, or outside buyer.
If you require additional guidance on how to compose your business succession plan, consult with a Monmouth County estate planning attorney today.
Contact Our Red Bank, New Jersey Firm
The planning and administration of an estate require experienced legal guidance. If you need an effective attorney to assist you with matters of wills, trusts, and estates, or the taxes associated with them, contact Margaret M. Mahon, Esq. LLC today to schedule a consultation.