NJ Multi-Generation Business Succession Planning Attorneys
For most family and closely held businesses in New Jersey, planning for succession is the toughest and most critical challenge they face. But business succession planning can also be a great opportunity to maximize opportunities and create a multi-generational institution that embodies the founder’s mission and values long after he is gone.
Statistical surveys have shown that 88% of current family business owners believe the same family or families will control their business in five years, but actual statistics prove that this belief is incorrect. The truth is that only about:
- 30% of family-owned businesses survive into the second generation;
- 12% are still viable into the third generation; and only about
- 3% of all family businesses operate into the fourth generation or beyond.
Obviously, there is a disconnect between the optimistic belief of the older generation of business owners and the reality that these businesses will usually not succeed through multiple generations. Why do many businesses fail in future generations? Simply put, the owners do not adequately plan for succession.
We work with our New Jersey clients to identify, design and implement plans for business succession. We counsel clients regarding changes in management and ownership of family businesses. We focus on the long-term health of the family business, mindful of the extent to which estate taxes can erode wealth, and attentive to the emotional issues that are present in every family. We focus on issues dealing with company management, generational transitions and the near- and long-term liquidity requirements of the business.
Often we are called upon to design and implement buy-sell agreements, corporate governance documents, and plans for succession from one generation to the next. We have extensive experience in all phases of New Jersey estate succession planning to protect individual and family wealth from excess New Jersey and Federal estate taxation. Our planning may include discussions regarding the implementation of a complex estate plan, including a Last Will and Testament and various unique trust agreements. We often advise clients about concerns regarding liquidity when New Jersey and Federal estate taxes are imposed. Sometimes we embark on various gifting strategies such as the use of family limited partnerships, charitable planning, and grantor retained annuity trusts.
Much of our planning addresses the possibility that a family member may someday go through a divorce or a personal bankruptcy. We often advise members of a New Jersey family business in connection with premarital or prenuptial agreements. We sometimes are called in to a divorce matter where a stakeholder in a family business is one of the parties. Someone needs to protect the family interests in those circumstances.
Frequently, clients will have a business in which one of the children is an active participant, and the other is not at all involved. We advise our clients in techniques to provide for the successful transition of the business to the child who is active in the business, while also treating the other child fairly.
These issues are not new to us at Einhorn Harris. Our business and estate planning lawyers have been advising family-owned businesses in New Jersey for over 50 years. We handle closely-held business issues, as well as estate and trusts issues, throughout New Jersey.
Contact us at 973-627-7300 today.