Family business owners are notoriously bad when it comes to estate planning. Too many demands and busy seasons are often cited as reasons to put it off, but as much as we don’t want to think about our own mortality or the painful loss of loved ones, there are numerous advantages to advanced planning.
A recent widow whose husband was the founder of their large family business shared with me three key things that helped her through this very difficult time.
- Planning in advance – because of his lengthy illness, all the estate and succession planning was in order.
- Communication – essential with family, employees, vendors, banks, etc. to continue the functioning of the business.
- Surrounding herself with friends and community involvement was very comforting during this very emotional time.
It is never too late or too early to plan so it is important to be proactive and get your estate plan in place. By establishing a trust, which can be changed up until the time of your death, you avoid probate and the public viewing of the appraisal for your property and it provides a private process to transfer your personal property after death. A plan can also be beneficial with your bank line of credit. Banks often have the authority to “call the note” when “uncomfortable” which results in accelerated payments needed to pay off a loan. Presenting detailed succession or catastrophe plan documents a head of time may reverse their decision to do so.
Another important preparation for your family business is the need to document its legacy. How did the business start, has it always thrived and provided well for the family? Telling stories and sharing successes and failures can have both emotional and physical health advantages. It is a source of inspiration and a wonderful way to pass along values that create a common bond between family members and encourage them to build on the family’s legacy. Whether it be video clips, audio, or print, start now to document these stories to memorialize and contribute to the values and visions of your family business for hopefully many generations to come.
Until next time,
Bea Wolper is President of the law firm of Emens & Wolper Law Firm, Columbus, Ohio, where her practice focuses on succession planning, estate planning, oil and gas law, contracts and the buying and selling of assets and businesses, with an emphasis on family-owned businesses. She is also the co-founder of the Conway Center for Family Business.