If you own a successful business in Michigan, no matter what your age is, it’s time to start thinking about passing the business on to your successors. Many admirable entrepreneurs are so immersed in business operations that they become in large part defined by decisions related to the company, so it becomes difficult to let the business fall under the control of other parties, even if they’re family members.
But good business succession plans typically involve good estate administration plans. This can be especially true for family businesses, the assets of which, if not divied up carefully among loved ones, could become a major point of contention in probate court.
For instance, who will take on managerial duties, and who will take on ownership duties? In other words, who will take on the more significant income and estate taxes?
These matters have to be considered in conjunction with the individual and shared goals of the family, so a one-size-fits-all approach is not the best way of ensuring a successful family-business relationship. Detailed planning has to be done, and it should be done early. You can always revisit your estate plan and business succession strategy if new issues arise.
Usually, to be positively effective, this kind of planning should be done at least 10 years before the business founder’s retirement. Not every situation requires that kind of foresight to protect business and estate assets, but the sooner a person starts, the more likely it is the assets will be passed down to heirs in the most satisfying way possible.
Again, revisiting these plans is a good idea, just to ensure that everyone’s best interests are protected for the duration.
Source: hispanicbusiness.com, “Handing Off the Reins Can Be Tricky,” April 12, 2013