Many Houston business owners dream that their children will take over the family company when they retire or pass away. For some this dream can become a reality if a child is interested in the same line or work or the same industry, but for many it is more complicated than that. In families with one child who is not interested in the business, or with more children with mixed levels of interest, planning is important to make sure that the business is passed down appropriately.
In some situations where no children have an interest in running the company, Houston business owners should consider the alternatives like having the company sold or naming a successor from outside of the family. In those cases children can still benefit from profits from the company or from the sale, but they won’t be burdened with continuing to operate it.
Alternatively, perhaps one child would like to run the company and the other has no interest. In that situation it’s possible to equal out the inheritance through a life insurance policy that benefits the child who does not want to run the company. Some business owners choose to simply devise the shares of the company or all of their partnership rights to the children equally, but that can create conflict down the road if there are disagreements about management, distributions, and other issues inherent in running a company.
In any of these scenarios, it is important to carefully and properly document estate plans using a will, trust documents, or other estate planning tools.
Source: Forbes, “Inheritance Equalization: Planning ahead now to reduce the burden for your kids later,” Steve Parrish, Jan. 16, 2013.
Our Houston law firm assists clients with many decisions about estate planning. More information can be found on our complex wills page.