Like the artist whose work outlives them, maybe you’d like your family business to last generations. Securing your legacy begins by asking, "does our family have an estate plan?" In this installment of our eight-part series, "Pivotal moments for family enterprises," we'll explore the value of both estate plans and legacy assessments and explain how to navigate the process to help shape the future of your creation.
At some point in the evolution of every family business, its founder and/or present leader is going to pass on. Even when it happens unexpectedly, the consequences don’t need to come as a complete surprise. Proper planning through a legacy assessment can help position and prepare the family and/or the associated business for continuity and provide a clear understanding of the founder’s or leader’s wishes. Many family business owners may think they’re covered by an estate plan, but an “estate plan” is generally a legal document covering the disposition of the estate assets. While important, it’s just a starting point for navigating the complicated issues associated with the transfer of assets and the payment of transfer taxes.
A legacy assessment goes far beyond that—helping the family and the business understand the ripple effects from a family leader’s passing, including potential liquidity gaps for covering estate taxes, who will ultimately control the family business, unintended repercussions of charitable gifts, potential conflicts among beneficiaries, and other matters related to ensuring the family’s business stability and financial strength. Legacy assessments can provide a more holistic view and empower families and their businesses to make decisions while there is still time to adjust and evolve. After all, an owner’s perspective on their business and who they want to take over often changes over time. It’s important that assessments are regularly reviewed and tested to make sure they remain aligned with the owner’s present goals and objectives.