How can the business founder provide fairly for both the children who inherit the successful family business and those who do not?
Any family whose net worth is tied up significantly in a family business must confront not only the issues of management transition, but also the possibly devastating estate tax burden resulting from inclusion of this equity ownership in the founder’s taxable estate. For example, a simple estate plan might give all the founder’s equity to Children A and B, who participate in the business, while granting the residue of the estate to Children C and D, who do not participate in the business. Unless the estate planning documents are properly drafted, the residue of the estate due to go to C and D may be hit with the entire estate tax liability, leaving the two sets of children with quite different net proceeds, unlike what the founder likely intended.
Related Questions
- How can the business founder provide fairly for both the children who inherit the successful family business and those who do not?
- What if the founders children are unlikely to continue in the business after the founders death?
- Should adult children participate in the business founders estate planning?
