Russ Cook & Associates, PC
view our Practice areas

The next generation and your family business

If you're planning to keep your business in the family after you retire or pass away, there's more to it than grooming a successor. Your heirs' desire to run the business, their leadership capabilities, and technology and cultural changes should influence the decision. In addition to those factors, though, you need a succession plan that won't damage the business as it changes hands.

According to Harvard Business Review, 70 percent of family businesses fail before the second generation takes over, and just 10 percent survive to a third generation. While the stats will vary from industry to industry, there are many universal items to consider as you draft a succession plan for your heirs.

Questions to ask before creating your plan

  • Will a single child inherit the business or will you divide among heirs?
  • Will you appoint a majority heir or strive for fairness? Will this create tension?
  • Is your business big enough to support multiple heirs and their families?
  • Will the transition itself be a financial burden?
  • Should you transfer the business directly to your heirs, or through a trust?

Managing the succession plan

The first step is determining who gets what. Once this is decided, the goal is to create a seamless transition that won't hurt the business while also handing over control in a cost-effective way. Timing and tax structures need to be addressed.

In any business succession, there are income taxes, gift taxes and estate taxes to manage. Whether you choose gradual gifting over time, a buy-sell agreement, annuity trusts or family limited partnerships, there are many options. Each has unique distinctions to help match the payment plans, tax bills and timing that fits your family.

Finding the right option

There is no template for passing a family business from one generation to the next but, as the Harvard Business Review points out, it's a uniquely challenging task to get right. While there isn't an easy answer, Tennessee law provides many options to spread out the cost and reduce taxes. An experienced estate planning attorney will be able to advise about specific trusts and other succession plans that will carry out the vision for your business while helping your heirs to take over its management and continue the legacy.

No Comments

Leave a comment
Comment Information

What Our Clients Are Saying About Us

  • “Everyone we came in contact with was wonderful. The staff and Russ treated us like family at all times.”

    - June S.
  • “Being new to the area having moved from out of state, I was searching for an attorney to assist in elder estate planning for my mother. I was referred to Russ Cook & Associates and found the firm as a whole and Russ Cook himself to be very helpful and accommodating to my needs, as well as experienced and very knowledgeable on the matter I was seeking assistance. I would definitely recommend Russ Cook and Associates.”

    - Brad H.
  • “Mr. Cook and his staff were phenomenal to work with on my will. They are extremely professional and friendly and made the process seamless. They go above and beyond!”

    - Amber C.
  • “Russ took the time to answer my questions by email, so that I knew exactly what would take place when I visited his office and his time as well as mine was used efficiently. I appreciated his thoroughness and his professionalism, as well as that of his staff.”

    - JoAnn G.
  • “Overwhelmingly positive experience.”

    - Stephen W.
Email Us For A Response

Schedule An Initial Consultation Today

Contact us today to schedule a consultation by sending us an email or by calling 615-200-9117.
We assist clients throughout the Nashville area.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Brand Contact

5141 Virginia Way
Suite 220
Brentwood, TN 37027

Phone: 615-200-9117
Fax: 615-370-5938
Brentwood Law Office Map

Office Hours:
Monday: 8:00 AM – 4:30 PM
Tuesday: 8:00 AM – 4:30 PM
Wednesday: 8:00 AM – 4:30 PM
Thursday: 8:00 AM – 4:30 PM
Friday: 8:00 AM – 4:30 PM

Map Image