It’s a storyline played out in best-selling books, movies and TV dramas: the successful family that’s torn apart after the death of the matriarch or patriarch and transition of the business and other assets. This isn’t the stuff of fiction. A succession plan addressing how to take care of your family business—and your relatives who are part of it—is key to a successful, perhaps drama-free, transition.
Why business succession planning is important
Transitioning your family business requires time, attention, empathy and communication as its effect on family members and on the business itself are vast. A succession plan is important because:
- It ensures that your business will survive your death (or a major illness). If the business is the primary source of income supporting your family, a thoughtful, detailed succession plan reflects your family’s values and supports its goals, identifies future leadership, and addresses potential issues before they arise.
- It can help ensure family members are taken care of emotionally and financially.
- It will also address ways that family members outside your business can still receive income, whether from the business itself or through other assets or trusts.