When the time comes to retire, it is important to know that the business you have worked so hard for through the years is protected. The decision to pass on the family business takes careful consideration, and these practical tips will help to ensure that the transition goes smoothly.
Establish Business Objectives and Goals Early On
It is never too early to start planning for the future. And the more detailed objectives you establish early on, the smoother the eventual transition will be. Think about what direction you want the company to move in and which people are most able to achieve those goals. Always try to involve your family in this process and maintain an open dialogue among those family members who are involved.
Decide on the Structure of the Transfer
When passing on a family business, there are a number of ways to structure the transaction. For example, aside from the standard lump-sum sale, you have the option of transferring all or part of the company as a gift. Additionally, you could sell a portion of the company while retaining some of the assets and income. Or you could choose to provide a loan to the new owner, thereby earning additional income through interest. There are advantages and potential tax implications to each of these options, so you need to decide on the structure that best matches your personal circumstances and goals.
Be Objective When Making Decisions for the Company
A family business is still a business, which means you must sometimes make very difficult decisions. When family is involved, it can be challenging to keep the best interest of the business in mind. However, this is the only way to ensure its continued success. For example, you must objectively look at which family members are capable of taking on specific roles, and know that not everyone will get an equal share. There are many arrangements that can be made that will allow non-managerial family members to benefit from the business and your attorney will help devise the best plan for your individual situation.
Work With an Attorney Who is Experienced in Business Law
So much goes into the successful transition of your family business, and the laws can be complex. Of course, you want what is best for your family and for the transition to be as easy as possible. And the best way to protect your business and the family members who assume the new responsibilities is to work with a qualified attorney. The experienced attorneys at Churchill, Quinn, Hamilton & Van Donselaar, Ltd. can provide essential advice on company structure, planning strategies at all stages of the company, plus many more valuable options that can help the company thrive from one generation to the next. Call us at 847-223-1500 or visit grayslakelaw.com for more information.
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