If you’re involved in a family-owned company, then the line between your personal life and your business life might sometimes become blurred. This can make it difficult to be objective – but it can also introduce legal risks, especially when it comes to things like succession and recruitment.
It’s usually best to handle these risks proactively, by putting in place the right internal procedures, and by recruiting outside help from the right family lawyers where appropriate.
The Legal Risks in Mixing Family and Business
So, what are the risks faced by family businesses?
To begin with, there’s a problem whenever a business owner decides to hire sons, daughters, wives, husbands, uncles, aunts, and cousins. This is because the rest of the workforce might perceive that preferential treatment is being offered in one direction. To stay on the right side of the law, you must keep pay, promotion opportunities, and working conditions the same for everyone. But putting your biases to one side might be difficult – since you might not even be aware that those biases exist.
Disputes, Divorce and Business Ownership
A family breakdown can be tremendously difficult, both emotionally and financially. When you’re splitting up from a person who is not only your spouse, but also a business partner, the complexity can quickly spiral. To deal with this risk, it might be worth coming to a legally binding arrangement, so that the business is sure to be apportioned in a certain way in the event of a breakup.
Succession Planning and Inheritance in Family Businesses
There will come a point where a business owner may wish to retire or move on to other projects. The question of what will become of the business in that event deserves serious consideration in advance. A business owner might want to not only identify a would-be successor, or a series of them, but also set out the necessary legal mechanisms to make the process as smooth as possible. This might mean writing wills, or setting up trusts so that a business can pass into the desired hands at a later date.
Mediation and Legal Support Options
Of course, when dealing with these matters, you’ll want to be sure that the wills and trusts you set up will be legally binding – and that there aren’t any special factors to consider. This is where the advice of a skilled solicitor can be invaluable. In cases where your personal and business affairs have come into conflict, a solicitor can help to resolve differences through mediation – and they can represent your interests, too.
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