When One Child Wants the Family Business and the Others Don’t

June 30, 2025

Family businesses often carry deep emotional and financial value. They represent years of hard work, a family legacy, and a source of pride. However, when it comes time to pass the business on to the next generation, challenges frequently arise—especially when only one child is interested in taking over the business, while the others prefer to pursue different paths. 

This situation can create tension, confusion, and uncertainty about how to divide assets fairly without jeopardizing family relationships or the viability of the business. Thoughtful planning is essential to balance these interests, maintain family harmony, and protect the business for the future. 

Understanding the Challenge 

When only one child wants to run the business, it’s natural for the other siblings to feel left out or concerned about their inheritance. Business owners want to be fair and equitable to all their children, but fairness does not always mean equal shares. It means recognizing and respecting the unique roles and contributions of each heir while providing for their financial security. 

Without a clear plan, disputes over ownership and value can arise. This can lead to costly legal battles, strained family bonds, and even jeopardize the company’s success. Early and transparent communication paired with strategic planning can prevent many of these pitfalls. 

Strategies to Achieve Fairness 

1. Use of Trusts 

Trusts can be a powerful tool to divide assets fairly. One effective strategy is to use family trusts, which are specifically designed to manage and distribute family wealth across generations. The business interest can be placed in a family trust that benefits all heirs but allows the child who is actively involved in the business to manage and control it. Meanwhile, the other children can receive financial distributions or other assets from the trust that reflect their inheritance.

This approach allows the owner to tailor distributions, protect assets from outside claims, and maintain control over the business through the trustee. Family trusts can also include provisions that encourage the active child to work in the business for a set period, ensuring commitment and continuity. Additionally, they offer long-term planning benefits, such as minimizing estate taxes and preserving family wealth.

2. Buy-Sell Agreements 

Buy-sell agreements are contracts that govern the transfer of business ownership upon specific triggering events such as retirement, death, or disability. They can be structured so that non-involved heirs agree to sell their shares back to the business or the active sibling under predetermined terms. 

These agreements provide clarity and prevent conflicts by setting a fair price and terms ahead of time. This way, the child running the business can buy out siblings who want to cash out, ensuring the business remains unified and operational. 

3. Alternative Asset Transfers 

Sometimes fairness can be achieved by dividing the estate so the business is left to the interested child while other valuable assets—such as real estate, investments¹, or cash—are allocated to the other children. This can involve appraising the business and other assets to ensure each heir receives an equitable portion overall. 

This approach requires careful valuation and tax planning but allows siblings to receive their fair share while recognizing the unique nature of a closely held business. 

4. Communication and Mediation 

Open conversations about expectations, roles, and concerns are critical. Business owners should involve all heirs early in the planning process and consider working with a mediator or family business advisor to facilitate discussions. This helps prevent misunderstandings and builds consensus on the best path forward. 

Protecting the Business and the Family 

Successful succession planning addresses both the financial and emotional aspects of transitioning the business. Here are key considerations to keep in mind: 

• Valuation: Accurate and objective valuation of the business is essential to ensure fairness. This can be done through professional appraisals that take into account market conditions and business performance. 
• Tax Implications: Transferring a business can have significant tax consequences. Estate, gift, and income tax planning should be integrated to minimize the tax burden on heirs and preserve wealth. 
• Legal Structure: The ownership and governance structure should be designed to facilitate smooth decision-making, avoid deadlocks, and clearly define roles and responsibilities. 
• Contingency Planning: Life is unpredictable. Plans should include contingencies for changes in heirs’ interests, health, or other circumstances. 

Partnering with Trusted Advisors 

Estate planning for family businesses is complex, especially when family dynamics and differing interests come into play. Working with experienced advisors—including estate attorneys, tax professionals, financial planners, and business consultants—can help craft a strategy that aligns with your family’s values and financial goals. 

First Western Trust offers a collaborative approach, guiding families through these challenging conversations and providing tailored solutions. Our team understands the nuances of family business succession and helps owners protect both their legacy and family relationships. 

Conclusion 

When one child wants to take over the family business and others don’t, achieving fairness requires more than equal division—it demands thoughtful planning, clear communication, and a customized approach. Tools like trusts, buy-sell agreements, and alternative asset allocation can balance the needs of all heirs while preserving the business’s future. 

By addressing these issues proactively and with trusted guidance, families can navigate succession smoothly, keeping both their business and family ties strong for generations to come. 

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Disclaimer: Commercial banking services offered through First Western Trust Bank, Member FDIC 

Investment, wealth planning, and trust and estate products and services are Not FDIC Insured, Not guaranteed by the Bank, May Lose Value.

This content is for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor for specific guidance tailored to your situation. First Western Trust Bank cannot provide tax advice. Please consult your tax advisor for guidance on how the information contained within may apply to your specific situation.