Running a family business in Mississippi can bring relatives closer together or tear them apart when it is time to plan for the future. Without clear estate planning, fights over control and ownership can erupt quickly. Many family businesses never make it past the second generation because of these conflicts. Business owners who plan ahead can protect the company and keep family relationships strong.

Using Buy-Sell Agreements to Clarify Ownership

A buy-sell agreement acts like a rulebook for what happens when an owner retires, passes away, or can no longer run the business. These agreements often use life insurance to fund the buyout. This means cash is ready to buy the departing owner’s shares without forcing the company to sell assets or borrow money.

There are different ways to set these up:

  • Cross-purchase
  • Entity purchase
  • A mix of both

No matter the type, the main goal is to avoid confusion and keep control in the right hands. It is also important to update these agreements regularly to reflect changes in the family or business.

Protecting the Business With Family Limited Partnerships

A family limited partnership (FLP) can help transfer business ownership while keeping decision-making power with certain family members. In an FLP, the parents or founders usually serve as general partners and keep control, while children or other relatives hold limited partnership interests.

This structure can prevent non-active family members from taking over daily operations, which is a common source of disputes. An FLP can also help reduce estate taxes and protect business assets from creditors.

Using Share Classes to Balance Control and Fairness

Issuing different classes of stock is another tool that works well. Voting shares can go to family members involved in the business, while non-voting shares can be given to those who are not. This approach lets all heirs share in profits without giving everyone a say in big decisions, reducing the chance of future conflicts.

Plan With Us to Keep Your Business and Family United

At O’Brien Law Firm, we know how stressful it feels to think about passing on a family business. We help Mississippi families create solid plans that protect both the business and family bonds. If you want to make sure your business stays strong while avoiding future fights, contact us today.

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