Leaving a Family Business
Passing a family business to the next generation takes more than a will. It generally requires a structure — operating agreements, governance, often a holding company — that addresses management, valuation, taxes, and the different roles family members will play.
What you should know
- A holding company sits above operating businesses and owns their interests, providing a single point of governance and keeping operational risk contained inside each subsidiary.
- For families with multiple businesses or mixed assets — an operating company, real estate, investments — a holding company allows centralized strategy at the top with operational separation below.
- Liability in any one subsidiary generally stays inside that subsidiary. A lawsuit against one business does not automatically reach assets held by others.
- A common multi-generational structure layers a long-term trust at the top, a holding company in the middle, and separate LLCs at the bottom for each business or asset.
- Transferring ownership through a holding company can let you gift interests in the holding company itself — moving the whole structure forward in one decision instead of business by business.
What it looks like for one family
The same collection of businesses and properties can pass as a tangle or as one coordinated structure.
Everything owned separately, no structure
The next generation inherits a tangle
Bob Caldwell owns an operating company, a rental building, and investments, each in his own name. At his death, the family inherits a fragmented set of assets with no shared governance — and one lawsuit against any piece can reach the others.
A holding company under a long-term trust
The whole thing moves forward intact
With a holding company over separate LLCs, held by a long-term trust, the family gains centralized governance, liability separation between assets, and the ability to pass the entire structure to the next generation in one coordinated step.
Bob, Peggy, and the Caldwell family are a composite example used to show how the choice plays out — not a real client.
Is your business succession plan ready?
Five quick questions about your succession plan. Brent reads your answer back to you at the end.
A 30-second guided check. See whether your business is set up to pass to the next generation.