Five Estate Planning Tips For Family Business Owners In Massachusetts

The Small Business Administration (SBA) explains that a company is considered to be “family owned” when “two or more family members own the majority of the business.” There are many family owned and operated small and mid-sized businesses in Massachusetts. As a family business owner, it is imperative that you take a proactive approach to estate planning. Here, our Norwood estate planning lawyer highlights five actionable tips for family business owners. 

Estate Planning Tip for Family Business Owners #1: Openly Communicate With Family 

Communication is one of the keys for effective estate planning—and it is especially important for family business owners. As a family business owner in Massachusetts, you should be sure your loved ones know your intentions early. Along with other things, this includes things like:

• Who will run the business;
• Who will inherit ownership;
• What role each person will play.

Without clear conversations, misunderstandings can cause serious disputes. It could potentially damage the company and even harm family relationships. 

Estate Planning Tip for Family Business Owners #2: Set Up a Plan for Business Continuity 

Business continuity planning is a must for family business owners in Massachusetts. Unexpected events—such as disability, incapacity, or even death—can quickly disrupt operations of a small or mid-sized company. A business continuity plan ensures your company can keep running smoothly if you are suddenly unavailable. Along with other things, estate planning tools for continuity planning may include powers of attorney, successor designations, and clear emergency protocols. 

Estate Planning Tip for Family Business Owners #3: Develop Business Succession Strategy 

A formal succession plan outlines who will take over your business and how the transition will occur. Will you pass it to one child, divide ownership, or sell to a third party? A well-drafted succession strategy avoids conflict and ensures business viability. In Massachusetts, it is imperative that you change your business succession plan for your family business to your overall estate plan. 

Estate Planning Tip for Family Business Owners #4: Fund Any Transition Plan

Even a great succession plan can fall apart if it is not financially supported. Indeed, this is one of the most common mistakes that business family owners in Massachusetts make. You need to consider how taxes, buyouts, or liquidity needs will be covered. A buy-sell agreement, life insurance, and/or other funding mechanisms can provide the capital necessary to execute your plan without draining company resources. 

Estate Planning Tip for Family Business Owners #5: Consult with an Estate Planning Lawyer 

Estate planning for a family business is complex. You and your loved ones do not need to figure out everything on your own. The sooner you consult with an experienced Boston estate planning lawyer for family businesses, the better positioned that you, your loved ones, and your company will be. 

Contact Our Massachusetts Estate Planning Lawyer for Family Business Owners Today

At Fisher Law LLC, our Massachusetts estate planning attorney has the knowledge, skills, and experience to help family business owners protect their family and their company. If you have any questions about estate planning for family business owners, please do not hesitate to contact us for a fully confidential consultation. We provide estate planning representation to family business owners in Norwood, Westwood, Dedham, Walpole, and throughout the Greater Boston area.

Source:

advocacy.sba.gov/wp-content/uploads/2024/04/Fact-Sheet-Characteristics-of-Family-Owned-Businesses.pdf