Many people dream of owning their own business. The freedom that comes with being your own boss is exciting, and businesses – like other assets – can be passed down to heirs and beneficiaries. According to the Bureau of Labor Statistics, approximately 90% of American businesses are family owned. Despite the prevalence of family owned businesses, very few businesses survive being passed down to future generations.
The overwhelming majority of American businesses are family owned, but only one-third will survive into the second generation, and only 10% will make it to the third generation. This is particularly tragic considering how much hard work is required to start and operate a business. While many factors contribute to the closing of a business, the death of its owner is an all too common cause. To protect your business from closing after your passing, you need to consider a business succession plan.
No comprehensive estate plan would be complete without a business succession plan. Unlike other types of assets, there are many considerations in a business succession plan. Property can easily be transferred to heirs, but businesses require a lot of work to keep them running. When creating a business succession plan, individuals need to not only consider inheritance, but also how ownership will affect their beneficiaries. Gaining an ownership stake in many business formats will have tax implications for owners, so it’s important to keep this in mind in your succession planning.
The most important consideration when planning business succession is management capabilities. Running a business is a unique skill, and not everyone can do it well. If you leave your business in the wrong hands, it can be quickly destroyed. Business succession planning can be difficult because of complicated family dynamics, so there is no one-size-fits-all approach.
Business Succession Lawyers
At Hensley Krueger LLP, we work with clients to fully analyze their situation and draft comprehensive estate plans that protect all assets from various threats. Our business succession lawyers can put you at ease, knowing your business will be taken care of after your passing. Contact us today to schedule an appointment to start your business succession plan.