While personal and business estate planning often involve complex legal and financial considerations, it is often the dynamics of interpersonal relationships that are the most problematic. Issues involving personal estates and business succession can be so charged with emotion that they cause paralysis when it comes to appropriating the assets of an estate.
Jim Dugan, managing partner of accounting firm Markovitz Dugan & Associates, says that even after they have made a commitment to formulate a succession and estate plan, personal considerations can cause business owners to put off making important decisions for years.
If an heir isn’t properly prepared to take over the business but expects to, for instance, an owner may procrastinate instead of coming up with an alternate plan of succession and causing friction with their child.
Another source of trouble is the discovery that the assets can’t be easily divided among the heirs because of how they are structured. Parents often have differing ideas about how the assets should be distributed, or children may have situations—like a shaky marital situation, a serious health condition or a chemical dependency problem—that can cause business owners to defer making choices.
“When you’re dealing with families, the waters are deep,” says Dugan.
