Estate Of Affairs

If your aim is to continue the business into the next generation and beyond, it's essential to deal with the long-term issues related to who should and should not have ownership as well as to what controls and incentives are needed by the next generation.

"In one case, a grandfather saved on taxes by bypassing his five children and leaving the business to his 18 grandchildren," says Swartz. "[But] only one grandchild was in the business, and he had to deal with the problem of 17 unwanted partners. Having to buy out the cousins almost brought the business and the grandchild to ruin.

"The grandfather would have been better served by addressing the continuity issue first, then having experts design a tax-savings plan around it."

This article was originally published in the April 1997 print edition of Entrepreneur with the headline: Estate Of Affairs.