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New Jersey estate planning: Passing on the family business

| Dec 5, 2013 | Estate Planning

Many New Jersey families have businesses they eventually hope to pass on to their children. However, without adequate estate planning, the wishes of the current owner may not be carried out. As a result, the interests of the business could be left unprotected. This appears to be the case with the literary character “Madeline,” including book royalties and intellectual property rights.

The creator’s daughter is 77 years old and has three sons. Only one of her sons appears interested in taking over the family business. Up until now, the two have had an informal arrangement regarding his use of the character. If his mother fails to leave him the intellectual property rights to the character, he may lose the ability to continue writing new books. However, she does not want to leave out her other two sons with regard to the business.

Similar issues could present a difficult situation for any parent with a family business and multiple children. Leaving a business in equal shares to all of the children could potentially destroy it; on the other hand, leaving the business to just one child could cause ill feelings among the children. An honest conversation with the children before setting up an estate plan could eliminate any doubts or ambiguity on the part of the parent.

Of course, the optimal resolution of how to pass on the family business would have the blessing of all of the potential heirs. However, that may not always be possible. Unfortunately, sometimes the wishes of the children and the needs of the business are not in line. At that point, estate planning decisions may end up being made based solely on the available information and perceptions regarding the needs of the New Jersey business. Whatever decisions are made, any estate plan is better than none at all.

Source: Forbes, Madeline And The Family Business, Deborah L. Jacobs, Nov. 27, 2013

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