What is the role of estate planning in a family business?
Think of estate planning as insurance. Failure to plan can jeopardize the business just as surely as a flood or fire can ravage a store front, if lack of liquidity in the family results in the sale or liquidation of a business to satisfy estate taxes. Failure to plan can jeopardize the family’s control of the business if provisions for buy-sell or redemption are overlooked. Estate planning, the key to family business continuity across generations, is a necessity, and it is the family’s responsibility. The board, if there is one, has a duty to evaluate and mitigate the company’s risks, which include the duty to insist that the family do thorough estate planning. For more information on estate taxes, see the Internal Revenue Service’s Frequently Asked Questions on Estate Taxes.
