Inheritance considerations when only one sibling goes into the family business
Christian is a Partner and expert in family business law

Inheritance is always an awkward issue when it comes to family businesses particularly where you might have one sibling that's involved in the business and one sibling who's not involved in the business.

The question always arises as to how that should be dealt with at that point in time and again there's no magic answer and one size fits all solutions and you sometimes see a situation where effectively the business is valued and perhaps at the point of the older generation passing away and then effectively the distribution of the assets of the side of the family that's passed away is perhaps rebalanced so that effectively the sibling who's involved in the business takes the share of the business as the inheritance and can take that business themselves going forward.

The other sibling then might get an equivalent amount as almost a first call on the estate and then everything else at that point perhaps goes out 50 : 50 between the two siblings.You can also see situations where it might be that the shares are actually left equally between the two siblings so you then end up with one sibling who perhaps runs the business is an employee as a director that business and the shareholder but they're only perhaps a 50 shareholder.

The other sibling being a 50 shareholder and you see that scenario arise but one of the things that that then tends to do is is build up over a period of time a situation when it comes back to sibling rivalry you've got one sibling who is working 100 of their time in the business but effectively for 50 of the reward and ownership.

Over time that has been seen in quite a lot of cases to cause particular issues and so there is unfortunately no magic answer and again that's where you know taking advice and talking through, being open with your children as well and discussing what you as the older generation would perhaps like to happen. Also what perhaps your children are expecting to happen and have some conversations with them at that point.

Gorvins Family Business Ep6 (2021)

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