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Should you sell your company or pass it on?

On Behalf of | Oct 7, 2021 | Business Succession Planning |

As a business owner who is making an estate plan, you probably know that your most valuable asset is your company. You still need to plan for the family home, your vacation cottage, your investment portfolio and everything else you own, but what you do with your company is going to have the biggest impact on your heirs.

So, with that in mind, should you sell your company and split the money between your heirs? Or should you create a business succession plan and give them the company to run or sell as they see fit? Here are some questions to ask as you decide.

Do your heirs want the company?

First and foremost, does anyone in your family even want to run your business? If they all have their own careers and aspirations, they may not want to take over your position as CEO. They’ll just see it as a hassle because now they have to sell it, or they have to completely change their own plan.

Can your heirs run it?

The second thing to ask, if they do want it, is whether or not you think they’re up to it. Not everyone is. If you do not have someone you can trust to take over, you may be dooming a profitable business to a decline and then to bankruptcy. Your heirs may be better off if you sold it and left them the money, which they can use for the things they do excel at.

Can you do it in a way that makes sense for your family?

You don’t want your business to cause problems with the family. For instance, say you have three heirs and you only want to leave the business to one. Will that cause the others to feel slighted? If you leave it to all three, will they fight and argue over who gets control? Again, when the situation seems too complicated, the easiest option is often to sell.

Creating your personal plan

Exactly what you decide, whether you want to sell the company and update your estate plan or create a business succession plan, is up to you. Be sure you know what legal steps to take moving forward.