As the name indicates, a family owned service is a service that stays in the household under perfect scenarios. If you are the owner of a family owned service, you have likely thought about passing down your business to future generations in case of your death. While the desire to pass down your service to the next generation is definitely reasonable, it is not always the wise choice.
Statistically speaking, your family owned business stands just a one 3rd chance of remaining successful once it has been passed down to the next generation. Your family owned business stands less than a fifteen percent possibility of prospering if given to a third generation. While the reasons for failure are many and differed, there are some common risks that can be easily avoided when choosing what to do with your household owned business.
The most common mistakes made by a family service owner is stopping working to ask the children whether they really desire the family owned company. This common mistake can quickly be avoided by simply sitting down and having a conversation with your kids now to figure out whether they have an interest in business. A business is sure to stop working if it’s given to somebody who has no interest in running it.
While a genuine interest in running the company is definitely important, the ability to run it is similarly as important. For this reason, once you have actually determined that your children are interested in running business, you have to ask herself whether they can doing so. Simply as giving to business to somebody without any interest in the organisation is destined stop working, passing down to company to somebody who is ill prepared, or does not have the skills, to run business is an equally deadly error.
Regardless of what decision you reach, that choice needs to be reflected in your estate plan. If you plan to pass down the organisation, sit down and speak to your estate planning lawyer about the very best method to do so. If you choose versus passing down the organisation, ask your estate planning lawyer about the best method to dispose of the business upon your death.