You may have spent the majority of your adult life building your Michigan family business and the thought of letting go of control to the next generation of leadership can be disconcerting. After being so focused on building the foundation for commercial success, it’s hard to step back and consider what comes next as you approach the probable end of your tenure as owner or manager.
Early planning can be key
Conventional wisdom says that you should not put off the tough decision-making that is necessary. The sooner you begin your business succession planning, the better shape the business will be in should something unforeseen happen and the earlier all interested parties can begin to plan and prepare themselves for the next chapter.
Legal counsel essential
Building a relationship with a Michigan estate planning attorney with specific experience in business succession planning can be important so that you understand the legal issues likely to arise and your various options. A knowledgeable Michigan estate planning and probate lawyer who understands business and tax implications can coordinate your business succession plan with your personal estate plan to see that your wishes are carried out even after your death.
Which leads to a big question: will you relinquish control of the business during your lifetime in order to retire or take on another challenge, or do you prefer to continue to work with the business as long as you are able?
At the least, a plan should be in place in case of your death that would transfer your ownership interest through your estate plan, but many professionals advise stepping down during your lifetime to make the transition of the business smoother. If you decide to retire, will you give it to family members outright or sell it to them, or to outside interests?
Another alternative is to wind down the business if you do not intend to transition it into the next phase. In any of these scenarios, tax considerations can impact the decision.
You need to look at the question of who should the next generation of leadership be. Should day-to-day operations stay within the control of family members? Might nonfamily management be a better option, with ownership staying with the family? Are there current employees who would be logical people to take over or should you begin to conduct a search for the right person or people?
All in the family
One challenge can be family expectations and dynamics. Sometimes children of entrepreneurs assume they will inherit their families’ companies, but they may not have the business knowledge or sense to take the reins, or siblings may not be able to work together well on a daily basis.
Most professionals advise having this conversation with family members as early as possible, so everyone is on the same page and there are no surprises to anyone later. Even if a relative is not right for management, he or she could still have ownership interest in the enterprise that could provide for him or her financially.
Let’s be honest though. Emotions can have a big role in succession planning for a family business. You may not want to hurt the feelings of loved ones or harm relationships. These are real concerns and part of why you will make the decisions you ultimately do for your business.
A Michigan lawyer can help you to balance your personal, family and business interests in your succession planning. The issues are extremely complex and a trusted legal professional can help you make informed and wise choices.