Running a family business is tricky. You must balance what is best for the customers with what is best for the family. Getting a business running smoothly is a feat. But deciding how the family business ownership will change after you’re gone is also important. Estate planning and a family business means planning how you want to establish the company now (is it an LLC, Corp, or FLP?) and what is the succession plan if something happens to you or one of the owners.
When you establish an estate plan, you prepare your business to succeed now, in the future, and after you’re gone. It’s how you want your long-term legacy to continue after you pass away. When considering an estate plan for your family business, you must consider your family, the consumers, legalities and taxes. Some items to consider are:
Working in a family business brings about unique problems. If it’s in writing and everyone has prior knowledge of the plan, your family business will continue to run and be successful after losing a member. A succession plan will determine the new roles for each family member when someone passes. Have an honest discussion with your family when writing a succession plan. Maybe the oldest child doesn’t want to take over.
A trust is set up to hold the property for the benefit of the trust’s beneficiaries. All income from the business is deposited into the trust and distributed to the family members either quarterly or yearly (or however you set it up). There are several different types of trusts that you can establish for your family-owned business.
Some types of trusts to consider are:
Working with an experienced estate planning attorney will help you establish the best trust for your family business.
You probably have many questions when setting up estate planning with a family business. Our experienced estate and probate attorneys can advise you on the best options to protect your assets and loved ones. To talk to an attorney, contact the Estate & Probate Legal Group at 630-864-5835.
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