Transition Plans Essential for Family Businesses
Virginia Beach, VA (Law Firm Newswire) October 6, 2014 – Family-owned businesses face one of their most vulnerable periods when transitioning to the next generation after their founder’s retirement or death. More than 70 percent of family businesses do not survive this transition. But a transition plan can help preserve the business for generations to come.
Planning for the transition should encompass both the legal aspects of the process, such as tax and estate planning, and practical discussions with the family members who will take over the business.
“Neglecting to set up a transition plan is one of the biggest mistakes a family business can make,” said Andrew Hook, a Virginia estate planning lawyer with offices in Virginia Beach and Suffolk.
An estate planning attorney can help with the development of a transition plan, especially the legal and tax aspects of the process. The plan will always include a will, and it will most likely include a trust. A well-written estate plan can smooth asset transfers after the business owner’s passing, and it should account for the taxes associated with the process.
It is essential to get the rest of the family involved in planning the transition and running the business well ahead of the founder’s retirement or death. Family members can offer vital insight into the transition, and they should have a chance to learn the ropes in a steady, well-paced setting.
When discussing the transition with the rest of the family, business owners should make sure that everyone involved is on the same page. Discussion should determine who will own the company, who will and will not be involved and what tax strategies will be planned. Those family members who will take over the business will need careful training and support to take over the business with confidence and pride.