As parents, we strive to make sure our children feel they are treated fairly. So, when passing the torch of the family business down, we often feel it should be divided equally. However, some experts believe you could be setting your kids up for failure by doing so.
Careful That You Don’t Make Assumptions
When devising the estate plan, don’t make assumptions that the children are on the same page with managing the business:
- You may assume that the kids can work easily together.
- You may assume that the children’s relationship won’t change after you die.
- You may also assume that each of your children are qualified in running a business.
Things May Get Complicated
Customer’s love family owned and operated businesses, but it can be challenging.
Most business partners don’t grow up together and siblings could have some long-standing bitterness, resentment, and grudges that may interfere with operating a successful business. As mistakes are made, this may intensify any animosity that is already in place.
May Be Blood Relatives With Different Views
Parent’s may have the same outlook on how the business is managed, but the children may not:
- Ideas on how to balance work and life may be viewed by the children differently.
- One child may want to keep everything running just as the parents did, while another child may want to present new ideas and changes
- You may have one child who wants a large paycheck, while the other reinvests their money.
- Some children may want to sell the business to not have the hassle of managing it.
Disagreements Are Certainly Going To Happen
As with any partnership, disputes will likely occur. It would be in everyone’s best interest if they can be resolved amongst one another. However, that isn’t always the case, and they may end up in court which could potentially affect the company’s reputation.
With all, it’s reasonable to consult with an attorney and discuss the estate plan with the children prior to handing it over. Professionals can assist with executing the business plan with little conflict.
Contact (859-746-0500) Michael O’Hara, PLLC for a Consultation
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About Michael A. O’Hara, PLLC
When you have to deal with the justice system – whether related to a civil or criminal matter – you need more than the truth on your side. You need a skilled attorney who can employ sound legal strategies to produce the results you are hoping for. I am attorney Michael A. O’Hara, and I am licensed to practice in Kentucky and Ohio at the state level, as well as in Federal District Court and the Federal Court of Claims. I have been representing clients in the Northern Kentucky/Greater Cincinnati area since 1994.