Whether a business has been passed down through generations or is a new venture with siblings or partners, any family business needs to ensure that it has the correct procedures in place should anything go awry. For many owners of family businesses, there is a grey area between what constitutes family matters and what is a business matter. As a result, when something serious occurs, it can not only through a business into disarray, but also a family, (we’ll cite the popular tv series Succession as a perfect example of how things can go wrong).
Even if things are stable within a business, it’s vital to ensure that agreements are put in place to ensure it continues to run smoothly should there be a death or family disagreement. Ensuring that each family member knows and understands their responsibilities to the business and has agreed to them, can stop family relationships turning sour.
Alongside this, Jarmans Solicitors always recommend that anyone involved in running a business makes sure that they have a Lasting Power of Attorney in place. A business LPA delegates a trusted attorney to handle any business affairs while a person is incapacitated. It’s worth noting that incapacitation can happen at any time and can include accidents and long illnesses. For a close family who works together, not having a LPAs in place can cause additional stress during an already traumatic period for the family.
While we’re on the subject, it is also vital that every family shareholder or member of a partnership have an up-to-date will in place. Dying intestate can leave any remaining business partners in turmoil, but when family is also thrown into the mix it can, again, create unnecessary stress and suffering for surviving family members.
For older family business owners, particularly owners of multi-generational businesses, succession planning should be paramount in your minds. We all want to retire at some point and enjoy the fruits of our labours, and succession planning can help to create a roadmap for a smooth handover to younger generations.
It is also imperative that any business that relies on family members to be the main shareholders and directors, have processes in place to deal with shareholder and director disputes. In any business these have the potential to be acrimonious, but in a close family business there is an additional personal element.
If you are a shareholder or director of a family business and would like expert legal advice on ensuring that the business continues to function smoothly, or want to discuss succession planning contact the commercial team at Jarmans Solicitors.