Most family owned businesses fail after the founder passes away. Good planning can prevent yours from being one of them.
Sometimes family business operators are aware that after they pass away their businesses will not remain under family control or may cease to exist entirely. If no one in the family is interested and capable of running the business, then it is generally understood that it will not remain under family control.
Those situations, however, do not entirely account for the fact that 70% of family owned businesses fail in the second generation. There are a great number of cases where the family does want to keep running the business, but is unable to do so.
When that happens it is often the result of inadequate planning as Bloomberg points out in "Keeping It in the Family."
A key problem is that succession planning for a family owned business is more difficult than it is for other businesses as there are more stakeholders involved. If the business represents a large portion of an estate, the founder must also plan for how relatives not involved in the business will receive an equitable inheritance.
One of the common mistakes people make is to give ownership control to family members who are not going to be involved in the actual running of the business. That creates tension and fighting with family members who are running the business.
Just because succession planning is more difficult for family owned businesses does not mean that it is impossible. With proper succession and estate planning, whether in Cincinnati or elsewhere, the business can thrive long after the founder has passed away. For that to happen it is important to not delay the planning, but instead to start as soon as possible.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
Contact a qualified estate planning attorney to help at all stages of the succession planning process.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Bloomberg (April 21, 2016) "Keeping It in the Family."