When New Jersey business owners plan their estates, they may wish to leave both their business and non-business assets to all of their children. However, this can present a challenge if not all of the children are involved in the business. It may be difficult to leave an equitable inheritance without a lot of resentment and confusion, but it is possible with the proper planning.
Some business owners decide to distribute their business and non-business assets equally. However, this may not seem fair to the children who have invested their time and energy in the business, since their siblings who are not involved in the business would get the same amount of business assets. Additionally, the children who do not work for the family business may question if they got their fair share
This problem can be avoided by using a life insurance policy that, combined with the non-business assets, equals the value of the business assets. The death benefits from the policy and any additional non-business assets can be distributed equally among the children who are not involved in the family business. Then the business assets can be divided fairly among the children who work in the business.
Using this strategy allows everyone to receive an equitable inheritance and can help the children keep the peace with each other in the future. It may help the business continue to thrive and grow as well. New Jersey business owners who want to leave behind the legacy of a family business may benefit from speaking to a knowledgeable estate planner who can ensure that all the heirs are treated equally.
Source: Forbes, "Inheritance Equalization: Planning ahead now to reduce the burden for your kids later," Steve Parrish, Jan. 16, 2013