As you move toward retirement age, you may start thinking about what you’re going to do with the business. It’s a major asset. Many people will sell the business so that they can put the money they make into their estate plan.
While this is certainly an option that you can use, you may want to pass the intact business on to your children. They don’t get instant cash, but they do get a functional company that they can run, allowing them to keep earning for years or decades to come. What you need is a business succession plan.
Do you have to include all of your children?
No, you do not. Some children may not want any part in it and others may be unfit to run the company. Pick the person who is best for the job.
Should you bring them on before you retire?
It can certainly be helpful. If you tell your child they are going to take over and then spend a year or more working with them, it makes passing the company on go more smoothly. They get hands-on training from you and do not have to learn everything once they’re in charge.
Is it going to start a dispute?
It can. Heirs who do not get what they want may dispute the arrangement. This is another reason why doing it early is so important. It’s better to have those discussions and disputes while you’re still around to offer guidance.
Do you have a plan?
If you don’t have a business succession plan yet, it may be time to get one in place. It’s never to early to explore your legal options.