Protecting your hard-earned cashAsset protection is not common-place amongst family businesses, but it should be. Forbes reported that of 336 middle-market family businesses surveyed, only slightly more than one in five family members who are C-level executives had formal asset protection plans in place. It was suggested those most likely to have plans in place were second-generation family members (35%) followed by first-generation survey participants (15%). Without a formalised asset protection plan in place, you could be left open and vulnerable to threats that could spell the end of the business altogether. But what is an asset protection plan? The simple answer is a strategy that will see your business thrive. The more technical answer is that an asset protection plan involves creditor-debtor law, which overlaps with an estate planning strategy to reposition assets out of reach of creditors.
One reason for the lack of formalised protection plans is a misconception that only large businesses need to consider them, or that only substantial assets are worth the time and effort.When we work with businesses, one of the things we do is provide a risk assessment health check – and you can bet asset protection comes up time and time again. The choice to put formalised plans in place is a personal one and the extent of work that can be done to protect family business wealth can be tailored to suit. If this is a concern for your business, we recommended seeking tailored legal advice as no two business needs will be the same.
Keeping control of the “reigns”Chances are you’re not going to work forever. As passionate as you are about your business, one day you are going to hand over the reins to someone else so they can continue the family legacy. That day might come sooner than you think by choice or by accident. Before you are anywhere close to reaching “sailing off into the sunset on a yacht” status, you should consider how the business will look without you – and who the best person is to carry forward your vision. Succession planning is among the top concerns for family business leaders who want to ensure the growth and success of the business in a way that will honour their founding values. This should be a decision based on logic, rather than emotion. Too often we see decisions made based on family politics, but external help can be a blessing in disguise. Those taking over can feel a tremendous amount of pressing to live up to larger-than-life expectations, but a firm plan in place well before a takeover is the best course of action to allow for a smooth transition period and well-founded business confidence. Anne Scheland is partner and head of commercial and corporate at Hillyer McKeown, members of the QualitySolicitors network.
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