As the name indicates, a household owned service is a company that stays in the household under perfect situations. If you are the owner of a household owned organisation, you have likely thought about giving your service to future generations in case of your death. While the desire to pass down your organisation to the next generation is certainly understandable, it is not always the sensible option.
Statistically speaking, your household owned company stands only a one 3rd opportunity of remaining successful once it has been given to the next generation. Your family owned company stands less than a fifteen percent chance of prospering if passed down to a 3rd generation. While the factors for failure are numerous and differed, there are some common mistakes that can be easily prevented when deciding what to do with your household owned service.
The most typical mistakes made by a family company owner is failing to ask the kids whether they actually want the family owned organisation. This typical mistake can quickly be avoided by merely taking a seat and having a discussion with your children now to determine whether they have an interest in business. An organisation makes sure to fail if it’s given to someone who has no interest in running it.
While an authentic interest in running the business is certainly important, the ability to run it is equally as important. For this reason, as soon as you have actually identified that your children have an interest in running the business, you have to ask herself whether they are capable of doing so. Simply as passing down to business to somebody without any interest in the company is doomed to fail, passing down to organisation to someone who is ill ready, or does not have the skills, to run the organisation is an equally deadly mistake.
Regardless of what choice you reach, that decision requires to be shown in your estate plan. If you plan to pass down the service, sit down and talk with your estate planning lawyer about the best method to do so. If you choose versus passing down the business, ask your estate planning attorney about the best method to dispose of the company upon your death.