This article includes excerpts from a chapter of Inside the Minds: Family and Business Succession Planning, 2010 ed., published by Aspatore Books, a Thomson Reuters business. The author of this chapter is Bob Freeman, Partner at Fraser Stryker PC LLO.

As we advise clients on their family and business succession planning, one common theme is to balance family peace with the ongoing success of the family business enterprise. Most clients establish "family comes first" as the underlying principle. They use a simple litmus test -- if a planning idea might help business, but will cause difficulties for the family when it gathers for family occasions, it is probably a bad idea. In order to successfully keep a business going and maintain family peace, we provide several transition strategies.

One early lesson in successfully transitioning a family business from one generation to another is to start that next generation at the lowest possible level, get their hands dirty, make them learn the "ins and outs" of the business from firsthand experience so that they earn and own their successes and, thereby, the respect of the people they will someday lead. A second basic lesson is to encourage the successor generation to get some experience outside the family business. This seems to add a broader perspective and help the next generation deal with external forces and inevitable change impacting the business. In addition, the concept of working for someone else is invaluable, shapes their image of the kind of boss they may try to be, and helps the kids develop a basic appreciation for having the opportunity to work in a company where they can control their own destiny.

Succession planning requires a unique skill set and a lot of relevant experiences. Here are some of the succession planning scenarios that we have worked with:

• Does the parent treat his children exactly equally, or fairly but not necessarily equally, or just differently;
• Creating a graceful exit for the patriarch;
• The surviving spouse's involvement in the family business;
• Kids inheriting versus paying to receive the family business;
• When multiple kids want to get into the family business;
• Handling kids not coming into the family business;
• The nonfamily son-in-law in the family business; and
• Planning tips for the nonfamily family business.

The entire chapter is included in the new book now available at www.west.thomson.com or 1-866-ASPATORE. The book will also be available from other online booksellers in the coming months.

Mr. Freeman routinely advises numerous family-owned businesses and assists in ownership and transition planning. For more information, please contact him at his direct-dial extension, 1-402-978-5217.

This article is provided by Fraser Stryker for general informational purposes and is not intended to be and should not be construed as legal advice on any specific facts or circumstances.

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