Too Many Cooks
I was involved in a lively online discussion the other day with several estate planning professionals from around the country. The topic of the discussion was the ever difficult choice of how to divide ownership of the family business among the children. The question is really one of how many cooks are too many?While there are many ways to approach this issue, depending upon the family and the business involved, I believe the first step in solving this problem is to determine what the goal of the business owners really is. With a family farm the goal may be continuation of the family farm business, but it may also be simply continuation of family ownership of the farm ground. If it is the latter we are really only engaged in estate planning and equal division may be appropriate. If it is the former, sound estate planning and business succession principles must be utilized. This often leads to the conclusion that fair is not equal.With business succession planning, I encourage my Clients to engage in the process of making choices and implementing systems that are going to give that business the highest likelihood of continued success. This may mean a sale or gift to a child or a sale to a third-party. In other words, make it a business decision. If the owner is not willing to take this approach, they are very likely making a choice that will lead to failure. Starting early is important - one reason is the cost of life insurance. Life insurance is a Swiss Army Knife that can help make the plan work in many different ways.If you do go forward with all of the children in ownership, make sure the legal documents that govern the business are set up to discourage litigation through indemnity, attorney fees, and other provisions. Also require mediation and other alternative dispute resolution measures.