The prospect of whether or not afamily business will survive after the owner passes is questionable. Andalthough the statistics regarding succession of family business to heirs can bedisconcerting, there is hope out there in the form of trusts.
This matter was addressed in a recentarticle in the Journal of FinancialPlanning titled â€œInvesting in Future Generations: Evolutionof the Business Skills Trust.â€
First, the troubling statistics:â€œLess than one-third of family businesses survive the transition from the firstto the second generation, and only about 10 percent survive the transition tothe third generation, according to stats reported in the Harvard BusinessReview.â€ While wealth can be transferred through a bit of effort on theplanning side, it is not the same as transferring the motivation and theability to pull it off thereafter.
How can a trust help withmotivation and to train up ability? That depends on how you frame the trust andthe conditions you set to slowly bring a beneficiary/heir up to speed. Theoriginal article has some very specific advice, but the main point is thatincentive-based trusts are a powerful tool.
If you have a business that needs to be run, and alegacy to leave behind, then you could do well with an incentive trust plan.So, what values do you enshrine in the trust and how do you offer incentives?The answers to these and other salient questions are specific to each and everysituation and family.
At IdahoEstate Planning we are the expertsyou need to know and trust. Work with us and we'll put together a plan thatworks for you and your loved ones. Remember, goodplanning is no accident.