India, Indians And Offshoring


Protecting The Family Businesses And Wealth


wealthymatters

For business families succession planning is important to ensure the continuity and growth of  business and  protection of  the economic interests of all family members.Family business owners are concerned about the interests of their spouses post their demise, disputes among siblings over the wealth and the leakage of the family’s wealth as a result of litigious divorces or family fights.Then there are concerns about ring fencing assets from litigation and confiscation.Sheltering from taxes is another common concern.

Both the objectives of ensuring the continuity and growth of  business and  protecting  the economic interests of all family members could be conflicting at times.Protection of the economic interests of all the family members often results in the distribution of wealth because it may  involve each  family member directly holding shares of the company.This may prove detrimental to the interests of the business for various reasons.One of them is that all the family members may not be inclined to run the business.Another reason is that one of the family members owning a significant stake may dispose off his/her holding to an external party,thus leading to loss of control over the company.Since all the family members are not inclined to run the business on a day-to-day basis,it would be essential to split the management and operating roles from the ownership,which entails a fresh challenge.The business owner might want to give exactly equal number of shares to everyone,but those who work in the business may feel they are entitled to more.Likewise,those who don;t work in the business may feel the same way about their own shares.After all,they may reason, they’re not drawing salaries,so they should get a bigger share of dividends and profit-sharing. Read more of this post

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