Best for the business vs. best for the family

When you’re doing your estate planning or business succession planning and trying to figure out what happens to the family business, you may want to leave the business to your children. If you have multiple children, your plan may be to split it up and give an equal portion to each one of them. Three children would split that business in thirds and they would all have to make decisions together, for example.

Business owners who take this approach are doing what is best for their family. They’re making the inheritance equal, and they are ensuring that they don’t show any favoritism. They’re trying to avoid disputes over ownership, and they’re trying to make sure that they don’t do something that drives a wedge among their children.

Is that best for the business?

But you also have to ask yourself what is going to be best for the company. Maybe two of your children are accomplished and driven to succeed, and you know they could run the business well. The third child doesn’t seem to have any interest in it. They also don’t seem to have the skills or the knowledge to run it.

If you give them all a third of the company, are you creating a scenario where that third child is going to harm the business in some way? Are you just going to create more disputes among your children as they try to navigate these business decisions in the future?

It’s important to carefully think over all of this as you set up your business succession plan, so be sure you know exactly what options are available.

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