Navigating the Discussion of Business Succession Planning

Avi Z. Kestenbaum, co-chair of Meltzer Lippe’s Trusts & Estates Department, and associate Christine K. Knox, provide guidance for trusts and estates practitioners charged with implementing strategies concerning family business succession planning.

The authors make note of the most-often cited causes of business succession failures, which include relationship issues, lack of competence and being unprepared, and tax and traditional estate-planning issues. They write that “Family business succession planning is especially difficult because of the emotional and psychological complexity of family dynamics, most notably the relationship among siblings,” and note that “the family business owner must balance the competing goals of securing the future success of the business with family unity and happiness.” This dual role, they write, may cause the owner to “feel torn between doing what’s best for the business and upsetting some or all of his family members.”

Certain characteristics are shared by family businesses that have successfully passed down more than one generation. Among them are:

  • A positive family business image that incentivizes future generations to uphold the good name of the family.
  • A code of shared values typically concerning a commitment to high quality products and services and fair treatment of customers and employees.
  • Investment in the business’ “human capital” in the form of teaching the values of the business to family members from early childhood on.

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