Discuss the decision thoroughly.
It could be hard to hear that one is inheriting a business if that information is coming after the death of a parent. Even if your child expected to inherit it, it could be quite a shock to learn that everything is now her property and her responsibility. Businesses are assets, but they are also labor-intensive and require a lot of sacrifices. Your child has the right to attempt to run it themselves or sell the business once they’ve inherited.
Tell your child yourself that you intend her to inherit and take over the business. This way, your child has enough time to decide if this is what she really wants, and if not, you can decide what to do that’s in both of your interests.
Phase in your child as the new boss.
If your child wants to inherit the business, it’s best to phase her in so that once you’re gone, she can take over as boss. Even if your child has spent considerable time working for you, giving her upper management experience will help ease the transition into being the new owner.
This is also a good way for you and your child to determine if she should be running the business before that becomes a possibility. If it’s clear the child doesn’t want to or can’t lead, then it may be better to formulate a different plan for the two of you. After all, a business worth something now is better than a business not worth much later.
Assess the business’s monetary value.
Your child may not know how much your business is worth without an independent, objective measure. While you may say its priceless, your child, who will acquire it, needs to know how much it’s worth should she sell it or have to pay taxes on it after she receives it.
Do you have more than one heir? Will they all get the business?
When there is more than one possible heir to the family business, consider carefully the share each will get. Do you want the business split equally? What happens if there is a deadlock in decisions? What if one heir wants the business and the others do not? How you split the business among your heirs will affect not only their wealth and the future of the business but may severely impact your kids’ relationships with each other. If you care about keeping peace in the family, ask your attorney to help you work through common situations that can arise after the death of a family business owner to ensure that you are making the best choices.
If you’re trying to figure out what to do with your family business when you pass, contact our estate and small business attorneys for advice. We will listen to your wishes and help you create a plan that gives you peace of mind and protection. Simply call us at 800-244-8814 to schedule an appointment via video conference or at one of our offices located throughout the state of California.