How a Succession Plan Can Help Prevent Infighting Among Family Members
- Nov 14, 2022
Succession planning is an ongoing process that calls for meticulous planning and preparation to ensure a seamless handoff of ownership, leadership, and administration of the family business and assets to future generations.
Conflicts Among Family Members
Power and control affect family enterprises like any other. Family dynamics in decision-making complicate power and control issues in a family firm. Relations without a shared purpose cause corporate conflict and low performance.
These tensions manifest in the marketplace and popular culture. In the TV series, Succession, the patriarch controls an international media company. When he has a heart attack while planning his succession, his children perceive a chance to take over the corporation. Even with skilled succession arrangements, Succession shows a family can implode.
It is where family business succession planning can make all the difference to your business’s future.
Common Problems That Lead to Family Business Breakdowns
An experienced business attorney has seen it a thousand times. A once united family becomes splintered under the pressures of running the business they now control.
Only 30% of family companies survive through the second generation. That means 70% of family businesses lose ownership of their assets and see family relationships crumble.
Distrust and poor communication account for 60% of failures. A seasoned business attorney can become the mediator that leads his clients to recognize and conquer the three common problems that lead to the dissolution of a once proud business.
Not Having a Common Goal
Although members of various generations may hold varying opinions, working toward a common goal can unite them. An attorney for succession planning can help a business formulate its goals.
Taking Charge versus Showing Concern
Many factors might lead to the demise of a family business, such as arguments regarding the distribution of financial resources, inefficient administration, and power battles when one generation hands the keys to the next.
If these conflicts are not handled, they can increase mistrust within families and impede performance within their businesses.
How Succession Planning Prevents Infighting
A strong succession plan helps cultivate a legacy that can hand down from generation to generation. Getting young people involved in the business allows them to learn by doing. Everyone contributes to the decision-making process in a family business, and everyone works for the same goals.
With a defined company plan, investors may be sure their money is safe and potentially increased. It urges family members to keep tight ties and move forward with passion and innovation. Family succession planning preserves your business legacy.
When you have an estate plan in place, it can protect a family’s business. If one family member dies, their estate will automatically pass on to their heirs. It means that if you die without having established an estate plan, your loved ones may not be able to inherit anything from you.
A succession plan also protects the business from lawsuits and litigation that could arise from infighting among family members. For example, if one family member is fired for poor performance or misconduct, they could sue your company for wrongful termination instead of seeking employment elsewhere.
A good estate attorney can help ensure that your family will not face any legal issues regarding succession planning.
Create Your Succession Plan With an Estate Planning Attorney
A robust, successful continuity strategy can anticipate the issues that family members, large groups of business owners, and stockholders will confront. Structures are established to promote strong leadership, competent decision-making, and family wealth and relationship protection.
When dealing with something as significant as succession planning, it’s important to have an attorney who understands the nuances of this process. An attorney can help ensure that you are protected from liability and that any successor-in-interest is properly compensated for their work.
Without a succession plan, the business may face structural dangers and jeopardize family relationships. An experienced estate planning attorney in New Jersey is the key to your business’s success as it moves toward the future. Contact the Falcon Law Group today to ensure the future of your family business.