For many Ohio family businesses, the road to success has been paved with plenty of hard work and perseverance. When considering estate planning options, the primary goal is often to preserve the family business for future generations. While there are a number of ways to do so, the intentions of one’s children play a pivotal role in finding the best possible solution.
In cases in which not all of the children are interested in remaining active within the family business, a more creative estate planning solution may be necessary. In such cases, the value of the business must be determined. There are professionals who specialize in estimating the value of a business, and hiring someone to complete that task will result in a written estimation of value.
Next, parents must determine how to create parity among their children. This can occur in the form of leaving a higher percentage of non-business assets to the children who do not want to retain ownership of the family business. In some cases, however, there are not sufficient assets available to reach that goal.
Another option is to leave all children an equal share of the family business, with the provision that the children who want to retain the business can buy out those who do not. This is a good fit for families in which the adult children have already achieved a high level of success, and where such a buyout would not be financially destructive. This approach also allows the children who are stepping out of the business to receive an equal share of the value at the time of a parent’s death, and not a value that was determined some time ago.
When seeking an estate planning solution, Ohio families should know that there are a wide range of options available. Dividing the value of a family owned business may be complex, but it is not an unattainable goal. As with any other area of estate planning, the best approach is to have a series of frank and open conversations with one’s children, so that everyone’s intentions are made clear from the outset.
Source: bizjournals.com, “Estate, succession planning for business owners“, Judy Cuzzacrea Wagner, June 4, 2015