By David A. Kubikian, Esq.
The word “succession” has become a larger part of our lexicon because HBO a few years back created an immensely watchable show about the cut-throat world of a family owned media company where hundreds of millions of dollars are at stake depending on who gets to take over when Dad leaves (or dies).
Entertaining? Yes. Realistic? Maybe. A learning moment? Definitely.
Succession is defined as being “the action or process of inheriting a title, position, property, etc.” Every business, regardless of size, will deal with a succession event if it is in business long enough. While family in-fighting on private jets may be reserved for the Roy family on TV Sunday evenings, the planning as to the who, when, and how your business transitions from one generation to the next (or not at all) is something that should take shape long before an actual transition happens.
To illustrate this point, consider a few common issues that come up:
1. The Estate Planning Angle. An all too typical scenario, the business, started by one generation has a younger generation heavily involved. One child seems to have the chops to continue to run the business once “Dad” hands over the reins (that is IF he ever hands over the reins). Another child is involved but not as much.
A third child has no interest in the business and in fact lives out of town. Dad’s estate plan is to treat all of his kids the same. That is, his last will and testament or his living trust state that all assets held by the trust or governed by the will pass evenly to his “issue.”
