Family business succession--too early to plan? Never!(Business Sense)

• Author: Bissonette, Laurie

Family businesses face big challenges when passing the management and ownership of the business to the next generation. The KPMG Global Family Business Monitor, released in May 2018, found that family businesses from around the world face similar challenges when transferring the family business to the next generation, whether on retirement, through inheritance or at any other point. Let's discuss some best practices when it comes to business succession.

Start early: Whether it makes sense to transfer the business during lifetime or on death, the earlier the planning starts, the smoother the transition will be. This includes involving the next generation early as well as ensuring that the succession goals of everyone involved are understood and agreed.

Seek professional advice: Family business succession is complex, and missteps can be costly. A professional adviser can help you understand the exemption and other tax reliefs available on the transfer.

Communication: When planning for the transfer of a family business, regular and open communication between the generations helps ensure that family members have aligned their expectations and vision for the business.

Develop a governance structure: Clarify and confirm your family's objectives from a legal viewpoint and establish succession plans and ownership structures that facilitate meeting those goals. Establish a structure for governance that guides and safeguards the family business's operations during and after the transfer.

Conduct regular health checks: Review business arrangements and holdings regularly. Conditions often change--in family relationships, business environments and tax legislation--review your succession plan and update it accordingly.

Monitor the value of assets: Monitor the value of the company's business versus passive assets; restructure holdings if necessary to preserve access to exemptions or other tax preferences. Please ask your advisor about...