Wall Street Journal on Business Succession Planning
The Wall Street Journal has an online article about business succession planning for parents that own businesses. The article is behind a firewall so you cannot read it without a subscription. But the article starts with this probing question and answer.
It is one of the toughest questions that parents who own businesses confront -- how can they be equitable in their estate planning when one child works for the company but others don't?
The answer: It isn't easy. But the best way to preserve harmony and, possibly, the business is to communicate with family members and forge an ownership-transfer plan as far ahead as possible.
Because family businesses are so often integral to the family, they are harder to pass on successfully to the subsequent generation. Small businesses are always more difficult to deal with because they are hard to operate. They can also introduce tax liabilities that force the sale of the business. Often, it is very difficult to divide the business between heirs so much of the value is lost due to the sale.
While the solution may be simple and elegant, getting there is the hard part. There are many personal and family issues tied up in the business, in addition to the many legal and tax consequences.
