Owner resources
Passing Your Colorado Business to Your Children
Handing a business to the next generation is part financial plan, part estate plan, and part family conversation. This page covers the questions that come up most when the successor is your son or daughter. If you are selling to a key employee instead, see the separate page on employee buyouts.
Educational only. Not personalized investment, tax, or legal advice. Vital Investment Management, LLC is a fee-only fiduciary and SEC-registered RIA (CRD #300811). Dillon Goodman, CPA, CFP®, works with Northern Colorado owners on the household side of planning. Vital does not prepare tax returns, does not draft legal documents, and does not broker business transactions; it coordinates with the owner's CPA, attorney, and valuation professionals.
How a family transfer differs from an employee buyout
In an employee buyout, the main questions are price and financing. With children, there are more: Is this a gift, a sale, or both? What about siblings who do not work in the business? How will parents fund retirement if the price is low or paid slowly? Those questions mean the estate plan and the transition plan need to be built together.
Gift, sale, or a combination
- Gifting shares over time can move ownership gradually. Gift and estate tax rules apply, so your CPA and estate attorney should lead on structure and filings.
- Selling to a child, often with an installment note, can provide retirement income but keeps parents exposed to the business's performance.
- A blend of gifts, a sale, and transfers at death is common.
- Trusts and entity structures may separate voting control from economic ownership. Your attorney designs these; Vital helps test whether they fit the household plan.
Fair is not always equal
Many families have one child who works in the business and others who do not. Giving everyone an equal share of the company can create friction; giving the business to one child can leave the others with less. Families often consider balancing with other assets, life insurance, or a purchase arrangement. There is no single right answer, and open conversations tend to help more than surprises in a will.
Parents' retirement comes first
Before deciding how generous the transfer can be, it helps to know what the household needs. A plan should show retirement income without relying on the business continuing to do well under new leadership. See wealth outside the company for why savings outside the business matter.
Preparing the next generation
- Agree on a timeline for responsibilities, not just ownership.
- Consider having the successor work elsewhere or in several roles first.
- Write down how decisions will be made while both generations are involved.
- Update buy-sell agreements, key-person insurance, and beneficiary designations.
Who does what
Your estate attorney drafts wills, trusts, and transfer documents. Your CPA handles gift, estate, and income tax analysis and filings; Vital does not prepare tax returns. A valuation professional may be needed to support gift values. Vital works on the household financial plan, investment management, and coordination through its transition and estate and succession planning services.
For governance, successor selection, and a broader view, see family business succession planning and the transition and succession guide.
Related reading
- Family business succession planning
- Selling your business to an employee
- Transition and succession guide
- Estate and succession planning services
- Business transition services
- Business exit planning in Northern Colorado
FAQ
Should I give or sell my business to my children?
It depends on your retirement needs, your children's circumstances, and tax and legal considerations. Many families use a combination. Your CPA and estate attorney should advise on structure.
How do I treat children who are not in the business fairly?
Families often balance with other assets, life insurance, or an arrangement where the successor buys out siblings over time. Fair does not always mean equal shares of the company.
Does Vital draft estate documents?
No. Vital coordinates with your estate attorney, who drafts documents, and with your CPA, who handles tax filings. Vital does not prepare tax returns.
Talk with Dillon Goodman
If you are thinking about handing the business to your children, a discovery call can help sort out what your household needs and which questions to bring to your attorney and CPA.
Book a discovery call