Passing on a Household Organisation
As the name implies, a household owned company is a company that stays in the household under perfect situations. If you are the owner of a household owned organisation, you have likely considered passing down your company to future generations in the event of your death. While the desire to pass down your company to the next generation is definitely understandable, it is not always the wise choice.
Statistically speaking, your household owned company stands only a one 3rd opportunity of staying successful once it has actually been passed down to the next generation. Your family owned organisation stands less than a fifteen percent chance of succeeding if given to a 3rd generation. While the factors for failure are numerous and varied, there are some common mistakes that can be quickly prevented when deciding what to do with your family owned organisation.
The most common errors made by a family entrepreneur is failing to ask the children whether they in fact want the family owned business. This typical mistake can quickly be avoided by just sitting down and having a discussion with your kids now to identify whether they have an interest in the company. A service makes sure to fail if it’s given to somebody who has no interest in running it.
While a genuine interest in running the service is certainly necessary, the ability to run it is similarly as crucial. For this reason, when you have determined that your kids are interested in running business, you have to ask herself whether they can doing so. Just as passing down to organisation to somebody without any interest in the organisation is destined stop working, giving to organisation to someone who is ill ready, or does not have the abilities, to run the organisation is an equally fatal mistake.
Regardless of what decision you reach, that choice needs to be shown in your estate plan. If you plan to pass down business, take a seat and talk to your estate planning lawyer about the best way to do so. Similarly, if you decide against giving business, ask your estate planning attorney about the best way to dispose of business upon your death.