Inadequate Estate/Financial Planning
Blamed for Family Business Failures
Editor’s Note:The following data, reprinted by permission from Richard Dino, Ph.D., Director of the University of Connecticut Family Business Program, and based on a study by Karen File, an Associate Professor at the University and Russ Prince of Prince & Associates, clearly points up the need for proper estate planning and periodic reviews to protect the firm and family.
Inadequate estate planning and failure to properly prepare and provide for the transition to the next generation, coupled with lack of funds to pay the estate taxes, were among the three leading causes for the failure of nearly 800 family-owned businesses in recent years.Conflicts with family members not actively involved in the business, was a close fourth. More…
of the Family Business
by Barbara Gill, CLU, ChFC, CFBS
& Dale J. Seymour, CLU, ChFC, CFBS
Seymour and Associates
Retiring from the family business?What does one do?Sell to other family members?Sell to an outsider?Perhaps retain the family business and gift portions annually to other family members.What about an installment sale or private annuity?Is an ESOP an alternative?What about charitable remainder trust?How does one structure the deal so that the buyer can afford to buy and the seller can afford to retire?Fortunately, there are many creative planning opportunities available to assist the family business owner who desire to create an exit strategy.Planning in advance becomes the key.
Without question, there are many choices to be made regarding business transfers during a lifetime.One option the family business owner always struggles with is whether or not to sell the family business to family members or an outside third party.In the event of structuring a sale with family members, several particular questions should be addressed. More…