* Copyright 2004. David Gage, John Gromala, and Edward Kopf. All rights reserved. David Gage is a mediator, psychologist, adjunct professor in the Kogod School of Business at American University, and co-founder of BMC Associates, a multidisciplinary mediation and consulting company in Arlington, Virginia. David speaks frequently to estate-planning associations on family business succession and involving grown children in the estate-planning process. John Gromala is a mediator and the West Coast director of BMC. John is a former estate planning attorney and ACTEC member, and he has served on the executive committee of the California Bar’s Section on Estate Planning, Trust and Probate Law. He lectures in the United States and abroad on mediation. His website is mediation-adr.com. Edward Kopf is a mediator, business consultant, and co-founder of BMC, based in Chevy Chase, Maryland.BMC’s website is BMCassociates.com.
1. Introduction
A significant portion of the wealth transferred to adult children by parents in the United States is in the form of operating businesses. The value of business assets after transfer is often contingent on the ability of the successors to work together. Whenever successors must collaborate as co-owners or managers, the risks to a successful transfer and preservation of wealth are greatly compounded. Next generation partners must not only have the requisite business skills, they must also have the ability to work as a team. In this article, we will examine the value of succession and estate strategies that create partnership teams in the next generation and describe some of the risks inherent in such strategies. We will also describe a tool called the Partnership Charter that helps control the risk through an intense planning and negotiation process for those family and non-family members who are the intended co-owners. Continue…
2. Creating Partnerships: Benefits and Risks of Passing Key Assets to More Than One Person
3. Why Is Having Sibling, or Other, Partners So Risky?
4. The Roots of Poor Partnership Planning
5. Lowering Risk through Effective Planning: The Partnership Charter
6. The Role of a Partnership Charter in Succession and Estate Planning
