When we think of a family-owned business, you may imagine a small business or a local mom-and-pop store. However, there are over 5.5 million family businesses that were founded, owned, or currently run by families in the United States. That accounts for 57% of its GDP.
Companies like Walmart, BMW, and Comcast were started by a single family, proving that it’s very possible to turn your startup into something you can pass on to your children.
How to Manage Your Wealth as Your Business GrowsIt’s never easy to speak to your family about what will happen to your assets when you pass. However, if you want to invest in your family, you need to have this conversation early.
Speak to Your Children and Direct Family MembersGenerational wealth is only possible if you have your family onboard or present with you as you decide how to dole out your assets. Even if you’re healthy, young, and active, speaking about what happens to your assets after you pass is the best way to prepare your family for the worst.
By gradually including your children in this discussion, they’ll start to learn about the importance of generational wealth and will often take their own precautions to preserve the family's assets.
Choosing a Specialist Private Wealth Management FirmA specialist private wealth management firm, like a multi-family office, can help you establish the financial needs of the family and build a long-term investment and generational wealth strategy. Family offices are also capable of preserving your family's values and lifestyle needs.
A multi-family office only hires the best financial planners, so you can feel confident that your key managers have an invested interest in protecting your assets from fraud or decline.
Get Your Family Directly Involved With the BusinessIf your children were too young when you first started your business, ask them to take on a part-time job in your office or during the summer. If your extended family members are interested in helping the company grow, encourage their involvement at all times.
When your family is involved with the business, they build an attachment to it, which makes it more likely they’ll continue your legacy and won’t liquidate your business when you pass.
Avoid Arguments or Liquidation With a WillWhen you create a will, you state your wishes about who you want to inherit your property. You can divide it up in any manner you choose (as long as it’s legal), but if you pass before you write a will, the state will decide what happens to your assets. This could hurt your family's wealth.
Name an executor in your will to make sure your business ends up in the right hands. If you have young children, name a trusted adult who can handle their assets until they’re 18.
Add a Trust to Your Will for More SecurityWhile a will explains where your assets will go, it won’t outline how your beneficiaries should handle your assets. A trust can also allow you to appoint an impartial trustee, not a family member, which increases the likelihood your assets will go exactly where they need to.
What’s more, a trust can eliminate or reduce the gift and estate tax your beneficiaries have to pay to receive your assets. In the end, a trust puts more money in your family's pocket.