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Whatever is decided, the management team needs to be part of the conversation and comfortable with the decision.
“Succession planning shouldn’t start at death or disability.
That’s too late.” spoke with Karas about the many considerations business owners should make when determining their estate plan.
Assuming that the owner wants to perpetuate the business within the family, he or she needs to determine how engaged the family is in the business and if they are able to manage and operate it.
It’s important to have a plan for the division of roles.
In a situation in which there are multiple children and in-laws, delegation of duties and buy-in are critical.
Sometimes, however, there are children and in-laws who are fine not being in the business.What are some of the questions family business owners should ask as they prepare their estate plan?An early question is whether the owner wants the business to continue, or would rather cash out.Taking steps to protect that asset now is one of the smartest things you can do as a business owner. Estate planning is one of those things everyone dreads and tries to avoid, but without it, your business could suffer, or even fail, if something were to happen to you unexpectedly.For that reason, it's never too early to start thinking about estate planning.When a family business is owned in part by people who are not related, it is important for the owners to discuss early on the terms of that ownership.There should be buy-sell agreements in place as well as a succession plan.Have conversations about what happens if one of the owners would become disabled or die, or when or whether children from any of the owners’ families can join the business, and how ownership transfers as the current owners leave the business.When the owner’s family is not capable of running the company or the non-family management doesn’t want to report to family members who are not actively involved in the business, ownership needs to take that into consideration.Ultimately, whatever the owner decides shouldn’t be a surprise to the family — they should hear from the owner what roles each family member will have and how they’ll benefit from the business, if at all.For most entrepreneurs, their biggest asset is often their business.