Galloway and Collens, PLLC
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Business owners need an estate plan early in the game

An individual or family may work for years or even generations to establish a successful small business. If the owner or owners fail to have a comprehensive and smart estate plan in place early on, that small business can be at risk for failure in the event that an owner or invested partner passes away. Statistically, only a small percentage of family businesses are passed down to the next generation successfully. With the right estate plan in place before it is needed, a Michigan family can beat those odds.

The first instinct of a business owner who wants to keep that business in the family may be to split it evenly among children. But, if one or more of the adult children have never worked or contributed to the business, this arrangement can do more harm than good. This can easily lead to family strife and legal disputes among family members.

One option in a case where not all children have a role in the business may be to structure the transfer of that business in a way that allows the active participants to have operational control. The other family members can still receive a percentage of profits, but without any control of operations. One other option in this situation is to leave other assets that are of equal value to children who will not receive a controlling stake in a family business.

A family business, like any other enterprise, can be complicated and difficult to handle as part of an estate plan. With the proper forethought and guidance, a Michigan business owner can pass along that business with as little family strife as possible, or hopefully none at all. The proper steps taken before they are needed can help ensure a smooth transition and hopefully continued success of a business that a family worked hard to create.

Source: yourhoustonnews.com, "Estate planning for business owners", July 3, 2015

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