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Is it time to choose a successor for your family business?

Running your own company may have become one of the highlights of your life. The sense of accomplishment you have felt over the years and the successes your business has garnered may have filled you with a sense of pride. You may have felt an even greater sense of pride when your children were born, and the idea that you could one day pass your business on to them may have brought you great joy.

Now that you and your children have gotten older, you may wonder how to best go about considering who should take over the company at the time of your retirement or, possibly, your demise. Luckily, business succession planning could go hand-in-hand with planning for your company's future or even when considering your estate plan. Of course, as with any business decision, you will likely have many aspects to take into account.

Considering successors

If you have multiple children, you may hope that they will each want to have some role in the family business. However, before you start making formal documents regarding their ability to take over under the right circumstances, you may want to ensure that they feel willing to participate. It is not unusual for some individuals to balk at the idea of going into the family business, and if you simply assume that one or more of your children will want to take over, you could face conflict.

Avoid nepotism

Though having one or more of your children take over your company may have been a long-time dream, you may want to avoid giving them a sense of entitlement or practicing nepotism. Simply giving a child a major role in your company because he or she is your child could have detrimental effects, especially if he or she does is not particularly business savvy.

Allow for growth

As you near retirement, you may want your appointed successor to take on more responsibilities before you completely hand over the keys to the company. However, you may wish to remember to allow your successor to make decisions that could benefit the business, even if they do not completely align with your specific ways to handling decisions.

Get it in writing

One of the most important parts of business succession planning relates to ensuring its enforceability. Board members, stockholders or other individuals with say in the running of the company may not go along with your appointed successor simply because you stated that he or she should take over. Therefore, you may want to ensure that you take the time to create formal plans regarding your business succession wishes, and an attorney may help with this endeavor.

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