Dealing with a family business in estate planning
Entrepreneurs in Connecticut and around the country generally want their spouses or children to inherit their businesses after they pass away, but turning over successful commercial ventures to individuals who may lack the skills necessary to run them can sometimes have disastrous results. Business owners with spouses or children who have shown little or no interest in following in their footsteps may be wise to delegate control of their commercial ventures to key employees or professionals. Doing this improves the chances of the business surviving and ensures that heirs are rewarded financially.
The individuals entrusted by entrepreneurs to run their businesses are not always qualified to distribute the profits to their heirs, so it may be prudent to appoint individuals with estate planning experience to fill these roles. Business owners should be especially concerned about key employees who may resent family members with no active day-to-day role in the company reaping the benefits of the employees' efforts.
When entrepreneurs are the driving force of a commercial venture and success without them is far from assured, selling a business may make more sense than leaving it to heirs or appointing a management team. However, the decision to sell a business should not be taken lightly. Businesses that are strongly identified with a charismatic owner may be of little interest to investors, and there is no guarantee that the funds generated by a sale will eclipse the revenues produced by a competent and committed management team.
Attorneys with experience in this area may work with entrepreneurs to create estate plans that safeguard their legacy assets while ensuring that their loved ones are taken care of financially, and they may suggest that these arrangements be revised when business conditions or family situations change. Attorneys might also suggest using trusts to achieve these goals to avoid the public scrutiny of the probate process.