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March 3-7, 2026

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Assuring the Successful Continuation of Your Family Construction Business



family business succession planAs a business owner, you might think nothing is more important than running your company. More important though, is how you protect it. How do you ensure all your years of hard work do not go down the drain?

Here are a few questions to ask yourself:

  • Am I working years, possibly even decades, to build my business only to eventually lose it?
  • Will there be infighting within my family over the business?
  • What will be my family and business legacy ultimately be?

Terrance Resnick and Leon Resnick of Resnick Associates say that with proactive planning, you can avoid costly mistakes in transitioning your family business from one generation to the next.

Succession Planning

The family business is the backbone of the American economy. Of the 23.3 million businesses in the United States, 90 percent of them are privately owned and controlled. Unfortunately, two out of every three family businesses will not make it from the founder to the second generation. Only about one out of six will make it from the second to the third generation. Each generational succession is more difficult. Even if you’ve transitioned to more than one generation, you must remain proactive.

The leading cause of business failure is inefficient succession and estate planning. Succession planning is the deliberate and systematic effort by a company ensure leadership and ownership continuity. Estate planning is the effective preservation and transition of personal and business wealth. 

The leading causes for unsuccessful succession are:

  • No plan or an ineffective/outdated succession plan
  • Inability to retain key executives and personnel after the owner exits the business
  • A disastrous personal estate plan, in which the company is left to an inactive spouse and/or family
  • The remaining liquidity position is weak

There are several critical steps you must take to ensure succession planning goes smoothly. As you navigate the process and consider all of the scenarios that make your business unique, be sure to consider the following issues:

  • Define your personal goals and vision for the future and identify a successor
  • Use techniques to reduce or eliminate estate taxes
  • Ensure proper liquidity positioning to avoid the forced sale of the company and provide for estate equalization
  • Use stock transfer techniques to help achieve succession goals
  • Conduct an independent review of existing documents and life insurance contracts to confirm they meet current objectives

When executed poorly, succession planning can bring a once successful business to its knees. The most common mistakes people make when succession planning are:

  • Complacency
  • Unrecognized estate size and corresponding tax that will be owed
  • Poor liquidity position
  • Improperly arranged life insurance
  • Lack of specialize planning

These mistakes can be avoided when business leaders are engaged and committed to the process.

construction succession plansEstate Planning

Estate planning is equally as important as leadership and ownership succession planning to ensuring the successful continuation of your business. Start by conducting a thorough analysis of your assets, both business and non-business. Will your assets go to whom you want, when you want, and how you want without reducing value? Are you 100-percent sure this will happen under your current plan?  

While there are a number of factors that can affect your overall plan, a well-organized estate plan can help your family carry out your business legacy and personal legacy. However, a certain amount of liquidity is needed to achieve your objectives. A liquid asset is one that can easily be converted into cash.

Consider the property in your estate:

  • Cash
  • Real estate
  • Personal property
  • Retirement plan
  • Business interests
  • Investments
  • Tangible assets
  • Revocable trusts
  • Annuities
  • Life Insurance

When looking at sources of liquidity for business owners, many have illiquid assets. When the liquidity event comes and you don’t have the cash, that’s where problems arise. If your estate owes gift or estate taxes, they must be paid before assets can be distributed. Without enough liquid assets, your executor will be forced to sell non-liquid assets to cover the costs.

Consider the following liquidity needs:  

  •        Administration expenses (2-5 percent of the gross estate)
  •        Federal estate taxes (within nine months, often deferred to the second spouse death)
  •        Family income needs
  •        Buyout of business interests
  •        Capital to strengthen the business at transition
  •        Replacement of key executives
  •        Deferred compensation arrangements

The following are all methods to pay estate tax and other obligations, but you should carefully consider the consequences of each option:

  • Cash: While cash sounds like an attractive option, it reduces the total bequest to the family and reduces funds the family may need for current and future expenses. Any future earnings on the funds are gone, as is capital that could have been infused into the company.
  • Sales of illiquid assets: This is the worst way to create liquidity. It reduces the total bequest to the family, causes a complete loss of future income, and the property is unlikely to receive fair market value at the time of the sale.
  • Life insurance: Assuming adequate insurability, this is the least expensive method to pay taxes and other required obligations. The death benefit may be estate tax free if ownership is structured correctly. Because of this,it is critical to understand the contractual language in your policies. In addition, this option can preserve the assets and help maintain family harmony, as it never puts the family in a position of figuring out what they have to sell.

The estate tax has been repealed numerous times in U.S. history. Privately held businesses continue to remain at risk regardless if there is or isn’t an estate tax. The failure to address issues will result in costly mistakes, including the potential loss of your company. Over 90 percent of estate tax returns for a business owner that is attempting to pass a business down to the next owner are audited. Setting up your estate and policies correctly can reduce the strain on your family after you’re gone.

family estate planningImportance of Separating Company from Family

While it can be difficult to separate business from family, you have to run your business as a business first. Many businesses have gotten in trouble because they became very successful and mom and dad started giving business interest to all of the children, even if all of them were not working in the business. It’s not always necessary to disinherit children who are not working in the business, but in most cases it doesn’t make sense to give them business interest.

Feelings are bound to get hurt and communication is key when talking about this difficult topic with family members. To stay ahead of any problems, be very clear in communicating intentions for the business. Hold regular family meetings outside of the office in order to maintain transparency with all those involved and not involved in the business. It is extremely unfair to put your child or children in a state of confusion about what will happen to the business when you are gone.

You’re going to spend tens of thousands of hours building your business, have the sense to spend at least 100 hours planning for the future of your estate. And don’t just file the plan away in a binder on the shelf, make a point to review and update the plan every year based on your current state or new objectives.

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