Many successful entrepreneurs in Virginia have spent years cultivating a business from the ground up. They may take great pride in their work, and they may have the intention of handing the reins of the business over to their children once they pass away. However, despite these good intentions, many do not have a business succession plan as part of their estate planning portfolio.
In fact, according to a study by JP Morgan, 90 percent of “wealth creators” surveyed wanted their children to inherit the family business, but only 20 percent had taken action to ensure these wishes will be met. However, the good news is that business owners can be proactive in making sure their business is passed on to the heirs of their choice.
Sometimes, succession planning starts by having a discussion with family members about the future of the family business before executing a formal succession plan. All heirs can voice their opinions and will know what to expect with regard to the family business. This could reduce the conflict that can occur if an heir feels cheated out of their share of the business.
Having one discussion with family members about succession planning is not enough. Just as a discussion should be had before drafting a business succession plan, a discussion should also be had once these documents have been executed. This way, your heirs can have a clear understanding of your wishes regarding their role in the family business.
When a person owns a family business, business succession planning is an important component of their estate plan. One may think that simply leaving the business to an heir in a will is enough. However, if you do not leave a detailed explanation about how your heirs are to share and run the family business once you are gone, this could lead to conflicts between heirs and a general misunderstanding about what your wishes truly are. Therefore, it can be a good idea to document a business succession plan, not just for your benefit, but for the benefit of your loved ones.