Search Site
Menu
Business Owner Planning: Money Now or Business Later

Let’s be honest, not every child is looking to own or run the family business.  Many children would be happier to receive a lump sum of money and be done with it.  Not surprisingly, clients are often looking for advice on how to avoid a family squabble when one child wants to own/run the business and another wants to sell their interest and obtain cash.

One basic approach to this issue is to structure the gifts to the children differently.  By utilizing appropriate funding mechanisms (such as insurance or an existing investment account), a parent can leave a monetary gift to one child while leaving an ownership interest to the other child.  Be aware, however, that some parents have begun this process only to determine that a child fully expected to have a continuing ownership interest in the family business even though they did not plan on running that business.  Accordingly, it is important to sit down with your children before entering into this type of planning and make sure you are clear about their goals.

Another, more flexible approach would be to set up a Buy/Sell Agreement between the owners (even if you are currently the sole owner) that sets up rules for the sale of your ownership interests in the business.  The benefits to this type of plan is that it allows the children some flexibility in the future.  If one child determines (sooner or later) that they do not want to be a business owner then the rules for sale of their interest are already in place.  For instance, a Buy/Sell Agreement can require a child to offer their shares to their siblings first before selling to an outside party.  A Buy/Sell Agreement can also require the selling child to include their siblings in any sale of the shares to avoid the temptation for one child to rush to the market for the best share price.

Still another approach might call for placing the ownership interests in trust to be managed by a designated trustee.  In short, they key is to identify your goals and concerns early, communicate those your goals and concerns to your children and estate planning attorney, and put together a plan that matches your goals with your business and your children.

Royce Lanning

Phone: 281-367-1222

Fax: 281-210-1361

rl[email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Wait… Lawyers Do That?

Since the founding of the Strong Firm P.C. in 2004, we have prided ourselves on not only providing excellent legal services, but also playing a large role in our community. Every year I have the opportunity to speak to area students from first grade through college grad students on legal-related
Read More
Wait… Lawyers Do That?

Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

Texas law provides several options to transfer ownership of a deceased person’s (usually called a “decedent”) property. We previously discussed the difference between a dependent and an independent administration. The dependent and independent administrations are used when the deceased person’s estate exceeds some minimal thresholds for size or complexity, such
Read More
Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

But You are My Attorney, not My Dentist…

Preventive maintenance for your entity from a legal perspective   “An ounce of prevention is worth a pound of cure.” 'De Legibus' (c. 1240) by English Jurist Henry De Bracton   Potential Client:       “I have owned a limited liability company for several years. I haven’t had any issues, but someone is interested in investing
Read More
But You are My Attorney, not My Dentist…

Don’t Fall for This Chinese Trademark Scam

Don’t Fall for This Chinese Trademark Scam A trademark is any word, name or symbol used to identify and distinguish goods and services. For business owners, trademarks provide an easy way to build customer loyalty and communicate the quality and source of goods and services. Businesses often spend a great deal
Read More
Don’t Fall for This Chinese Trademark Scam
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form