A recent post in the New York Times’ “You’re The Boss” column reflected on lessons learned from difficult company successions that were very difficult because there was no plan in place to follow.
Don’t let this happen to you!
Susan Parker owns Bari Jay, a bridesmaid dress company that she and her sister inherited from their father. Parker had never planned to run Bari Jay, but felt she owed it to her father’s legacy to step up.
However, she and her sister have decided not to put that burden on their own children. Each sister has two children, and they are currently in the throes of business succession planning that will give those children a choice on whether or not they enter the business.
“We want to do everything our father didn’t,” Parker said. “I’ve learned from this whole process that it’s so complicated to get what you want.”
So Parker and her sister have created a plan that provides themselves and their children with a number of choices. If one sister dies or leaves before the other, her half is put in trust for the children while the other sister continues to run the company. They have made provisions in the plan for buy-out scenarios for themselves and their children, and included a clause that prohibits the spouse of either sister from inheriting a part of the business – a savvy move that protects the company from divorce and remarriage.
Parker said her father never made a plan to leave the company to her and her sister, but it would have been helpful if he had. She and her sister are determined to give their children the choice they never had by planning for a future that comes to us all eventually.
What provisions would you want to put in your plan?
If you would like to discuss your business succession planning, call our office today at 530-581-5455 to schedule a Family Wealth Planning Session or your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit with Jill Gregory, a Creative Business Lawyer™ and Family Business Lawyer™.