A part of business succession planning is to think about who should take over your Massachusetts business in the event you pass away or are no longer able to run the company. It seems natural to consider your son or daughter to become your successor. For some business owners, however, the decision is not so clear cut. There are several questions to consider before you name your child as your business successor.
Naturally, your first question is whether you want your child to take over at all. Forbes points out that running a business entails great effort and sacrifice. The Forbes piece describes the experience of a business owner, a mother who decided that she did not want her children to go through the hard experiences that she went through. Ultimately, she did not leave the business to her children. In other cases, parents may believe that their children simply cannot handle running a business and name a successor outside the family.
Some parents may look upon their children as potentially capable of handling the business but are not yet ready to handle managerial duties. If so, a parent can choose to divide ownership of the company, such as handing off ownership shares to a child while still retaining a majority ownership while the child is being trained to be a future manager.
There are also parents who may view one or more of their children as capable of running the business, but not the rest of their offspring. For instance, an older son may be named as a successor, but not a younger son. The parents may choose to give the younger son special gifts or some other arrangement to show that they are not showing favoritism to the other child. Additionally, the parents might give the younger son non-ownership shares in the business.
Ultimately, the choice to name a child as a business successor remains a very personal decision for Massachusetts business owners. Keep in mind that business succession takes many forms, so this article does not convey any legal advice. Its purpose is to provide educational benefit on business succession issues.