I spend a lot of time talking with business owners about the next generation in their business. If it happens to be a family business we always get into a conversation about which children should own stock.
Too often Mom and Dad have a different opinion about this. If Mom is out of the business, she wants all of the children treated equally. Dad probably wants the family member in the business to own the business eventually. Because of this, Mom and Dad are rarely on the same page.
More often than not Mom and Dad end up making things equal for their children through business stock ownership. They believe the best way to do this is to make sure each of their children share in the stock of the family business. This is a disaster waiting to happen and something you should avoid at any cost. Here’s why:
When you equalize you’re usually giving stock away.