One of the common attributes of family businesses is “discord”. A recent article talks about Tom Benson who is the owner of the New Orleans Saints professional football team and the NBA Pelicans. When he announced that he was leaving the teams to his third wife, members of the family took issue and an attempt was made to declare him mentally unfit. He won in the lower court, but it is being appealed by members of his family.
There is no absolute way to avoid family discord about family business because it is tied to family culture, personalities, love and affection or its absence. However, there are some things that can be done to minimize that risk if there is proper advance planning.
Leaving the momentous decision as to who is going to be the owner of two highly successful professional sports teams until one is 88 years of age, is very risky. In the Benson situation, there is plenty of money to support controversy. However, good planning should not depend on the dollar amount involved but rather on how to insure harmony and continued friendships.
There are a great many ways to address the situation of ownership succession, management control, asset protection, estate planning so that the needs of everyone can be accommodated. However, leaving it until twilight years is not the best way to deal with this situation.
If you have a family business and you want to make sure that your hard work is not lost, the love and affection of family members is not undermined and you want to have peaceful and cooperative succession, you should definitely confer with an attorney who has experience in these kinds of family agreements. You may say why today, not tomorrow. One very good reason is that the Internal Revenue Service is looking at transfers of minority interests in family enterprises with a view of changing rules that will diminish if not remove the allowable discounts in value. While everyone is supporting changes in the tax law, don’t count on it as happening or if it happens it is not necessarily going to be for the better for your purposes.