Ideas & Solutions for Owners of Family Business?

“Family-owned businesses generate approximately 60% of the U.S. GDP- about $9 trillion. But only about 30% of family businesses survive to the second generation.” [1] Less than 15% make it to the 3rd generation and beyond.[2]

Why is this and what can you do to protect your family business?

Many family businesses do not have a succession plan. The owners have no strategy or plan in place to deal with a sudden death or even a long term plan for the sale/transfer to family or non-family members.

 Business succession planning refers to the practice of using estate planning strategies to increase the chances for the survival of your family business when you retire or die unexpectedly.  Business succession planning is a very complex area and involves accounting, insurance for liquidity, professional investment advice and a knowledgeable estate planning attorney.

Do you need an estate attorney who is familiar with family business succession planning?

It’s not essential, but it can be very valuable. One goal of business succession planning is to transfer the family business to the next generation or to sell to another in a way that increases the probability of successfully achieving your personal goals.  Estate taxes are an important consideration.

And in both respects, the advice of an experienced attorney can help you to maximize your strategic goals and to complete the proper documentation.

What could happen if you do not have a family business succession plan that incorporates estate planning?

  1. Your family business could be lost to estate and inheritance taxes.
  2. Your family business could be lost because there is no formalized arrangement to transfer ownership of interest to your heirs and disputes might arise
  3. You waited too long to start transferring your family business and the costs become prohibitive
  4. Your family business could be lost because there is no plan for financing it

An estate and business succession attorney who is familiar with family business succession planning will be able to design time sensitive strategies that enable a parent to make gifts of interest in the family business, or in trust for their benefit, while retaining full control of the family business decisions and reducing the ultimate taxable estate.

 All of your estate planning documents must be carefully designed to fit together with the business documents to create a business succession plan that works for you and your family. For example, you may want your youngest son to run the family business when you are unable to due to incapacity, retirement or an early death. With the business interest owned by your living trust your son can be appointed by the terms of the trust as the successor trustee thereby avoiding sibling conflicts over the control of the family business. Likewise, a buy-sell agreement can be put in place to structure the purchase and to provide income to you and a surviving spouse.

Owners of family businesses are the bedrock of our American economic system. They generate 60% of the U.S. GDP. They employ most of the employees in the country. Even Microsoft was a family owned business.

It is necessary to protect your family business for the future. Don’t let your family business fall into the vast majority of family businesses that don’t survive to the second generation.  Remember there are tremendous estate and gift tax savings from a comprehensive family business succession plan but they are time sensitive.

To access a team of succession planners with business, tax, and estate planning experience contact our estate attorney’s David M. Frees III, Douglas L. Kaune or Whitney O’Reilly to learn more.

By: Estate and Trust Attorney's David M. Frees and Whitney O'Reilly

Unruh, Turner, Burke & Frees Attorneys At Law



[1] “Family Enterprise USA Annual Survey.”; Family Business Institute.; PwC Family Business Survey 2012,” See also June-July 2013.


[2] Id.

David M. Frees, III
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