Article 63-Estate Planning Series: The First Steps to Successfully Passing on the Family Farm, Ranch or Business

Written by Wright Law on . Posted in Estate Planning

Last column I discussed the challenges facing families attempting to pass on the family farm, ranch or other business.  Family owned businesses play a critical role in society.  Those of us who reside in rural agricultural areas know this to be especially true. 

However, according to the Harvard Business Review, 70% of family owned businesses do not survive the transition to the next generation.  This is an incredible statistic.  Why would this process result in the end of so many businesses?  I am convinced that this result is entirely unnecessary. 

Before discussing solutions, it is important to identify the obstacles.  In my opinion, the obstacles may be different than what many family business owners think.  When I discuss this issue with clients or potential clients, they typically identify concerns over complexity and cost.  In reality, this thinking may simply be a symptom of the actual obstacle; which can affect us all. 

The actual obstacle to a successful transition is the failure to start, what I call the failure to “plan when you can.”  The strategy for a successful transition may be neither expensive nor difficult.  But if those concerns prevent you from exploring your options, it will not matter how many options you may have.  You will have given up the ability to choose any of them.  Instead, once the parents are no longer able to operate the business (through death or disability), there will be very few, if any, options available. In that context, it is not surprising the likelihood of success is not good.   

There are several strategies that can allow you to preserve the value you spent a lifetime building, and set the next generation up for success.  The first step is to make the commitment to understand those options.  You can then make informed decisions which are best for you and your family.  Without that commitment, the solutions I will begin discussing next column will be worthless. 

© 2016 Steven J Wright  

Tags: , ,

Leave a comment

Wright Law Offices, PLLC

477 Shoup Avenue, #109
Idaho Falls, ID 83402
Phone: (208) 523-4433
Copyright © Wright Law Offices, PLLC,
All rights reserved.
The information on this website is provided by Wright Law Offices, PLLC as a service to the public. Legal advice must be tailored to the specific circumstances of each case. Nothing provided herein should be used as a substitute for legal advice. The information provided on this site is not guaranteed to be complete or up-to-date.