Television isn’t what it used to be. It’s much better. Long gone are bland sitcoms and instead you have shows like Empire, a multi-generational drama about a family from the wrong side of the tracks that makes it big in the music industry. (If you aren’t up on the latest network TV schedule, you can watch it here: http://www.fox.com/empire ) Following in the footsteps of the fearless Shonda Rhimes, Empire puts uncomfortable truths about attitudes towards the LGBT community front and center all while spinning a story full of drama, creating OMG moments, and producing a soundtrack you’ll want to download. (It’s available on iTunes. We checked. And downloaded it. Immediately.)
Warning: Spoilers Ahead!
Lucious Lyon (we couldn’t really believe the character names either), the head of both the literal and figurative Empire, is diagnosed with a terminal illness and realizes he has to decide who will take over the company he worked so hard to build. Of course, he conveniently forgets to factor his angry just-released-from-prison ex-wife into his calculations and machinations. There is a valuable lesson to be learned here for owners of family businesses.
Estate planning for family businesses is a little more involved than just creating a living trust. Depending on the nature and valuation of the business, different strategies are needed to help facilitate a seamless transfer of the family business. There are a number of options immediately available to you as the business owner. You could, for example, decide to have your heirs take shares in the business now and have a plan for distributing only your shares in your estate plan.
What if you don’t trust anyone to run your business or your business is so personal that it should cease to exist when you do? (http://www.entrepreneur.com/article/181002 ) In that case, your estate plan will be a key tool to make sure that your business terminates with you and that your heirs are protected from business related liability. You may only trust your business in the hands of one person – who may not be your family member. In any case, you would want to consider a buy-sell agreement with provisions for triggering events for the sale, such as your incapacity, retirement, or death. These can be difficult to implement but are important agreements to have. (http://www.familybusinessinstitute.com/index.php/2011-articles/why-are-family-business-buy-sell-agreements-so-hard-to-implement.html )
Obviously planning for the transition of a family business is a complicated matter. There are estate tax and gift tax issues that must be considered but may make your eyes glaze over. (Bored already? Check out this clip to help you refocus: http://www.fox.com/watch/373041219622/7684647168 . Sorry, it didn’t help? At least you were entertained.)
What do we recommend? Talk to an estate planning attorney and coordinate with your other advisors. You’ve worked hard to build your business (even if you haven’t started it with ill-gotten drug money profits, like Lucious Lyon) and you should be able to pass it on (or not, if you so choose) in the way you want.
So you can accomplish your goals without a family rivalry, drama, or even a catchy soundtrack (although we highly recommend you consider creating one). You’ve built your empire. Don’t sit on your laurels now.