Family businesses can be a wonderful thing to pass down between generations, but they can also add serious complexities to estate planning. If estate plans are not carefully drafted to account for business-related assets, family businesses run the risk of being dissolved or sold during estate administration or other life events. Those who own Ontario family businesses, such as farms, shops or other enterprises, should consider a few things when planning for the future besides simply who gets what when the primary owner passes away.
The first thing people should plan for is incapacity. Many people think that the only time their estate plans will kick in is if they die, but the truth is that injury or illness can render someone unable to make decisions for themselves. Sometimes, a person will be incapacitated and then recover and be able to take on the business once more. Planning for these potentialities is a good idea.
A business contingency plan should also include instructions or restrictions for management of the business. Are children involved enough to run things? Should someone be “in charge” until beneficiaries are ready? This should all be discussed.
Estate planners should also protect themselves from certain risks that could force their families to sell their assets. For example, taking steps to protect a family farm in case of a divorce between a beneficiary child and his or her spouse may be in order. Additionally, protecting assets from beneficiaries’ creditors in case of a bankruptcy filing should be considered. The best way both to plan for these things and to oversee estate administration with such complexities involved is to work with an Ontario lawyer.