Succession Planning: Keeping Your Family Business in the Family
- Steve Julal
- Jul 15
- 2 min read
Updated: Jul 16
At some point, every family business owner faces the question: What happens to the business when I step away? Whether you're preparing for retirement or planning your estate, the decision about who takes over is often more complex than just transferring ownership. Beyond managing operations, finances, and employees, family businesses carry deep personal meaning — built on years of sacrifice, commitment, and hard work.
That emotional connection makes estate and succession planning essential, especially if your goal is to keep the business in the family. However, doing so comes with unique challenges.
Who Takes Control?
From an estate planning standpoint, it’s generally wise to begin transferring ownership to the next generation sooner rather than later. Why? Because shifting appreciating assets out of your estate early can reduce potential estate taxes.
Under the newly enacted One Big Beautiful Bill, estate and gift tax exemptions will rise to $15 million per individual (or $30 million per couple) beginning in 2026, with inflation adjustments going forward. For 2025, the exemption remains at $14 million per person.
But what if your children aren’t ready to take the reins, or you’re not ready to step down? What if other family members, currently uninvolved, express future interest in the business? With proper planning, you can transfer equity without giving up control, allowing flexibility while securing your legacy.
Four Ways to Transfer Ownership Without Losing Control
1. Choose the Right Company Structure
Certain business structures allow you to transfer of ownership while preserving decision-making authority. For instance, C Corporations and S Corporations can issue nonvoting shares, enabling you to give family members a financial stake in the business without giving up control.
2. Use Trusts Strategically
Various trust options like revocable living trusts, irrevocable trusts, grantor retained annuity trusts (GRATs), and family trusts can facilitate business succession. Each comes with unique rules and tax implications, so it’s essential to do your homework and consult with a legal professional to choose the best fit for your goals.
3. Form a Family Limited Partnership
A Family Limited Partnership allows you to centralize family ownership and retain operational control. These partnerships are often used to manage family business assets, reduce estate taxes, and gradually shift value to heirs over time.
4. Through Employee Stock Ownership Plans (ESOPs)
An ESOP can help transition ownership to family members actively working in the company (as well as key employees) while giving you the option to access liquidity.
This structure offers tax advantages and, when set up correctly, lets owners retain control even if the ESOP acquires a majority stake.
It’s critical to consult with experienced professionals who understand both tax and estate implications. VAAS Tax Professionals can guide you through the process, helping you craft a plan that balances control, family dynamics, and financial sustainability.
Succession planning for a family business isn’t just about taxes: it’s about preserving a legacy. Thoughtful planning gives you the flexibility to meet your family’s evolving needs while protecting the business you’ve built.
