Accounting firm BDO Canada1, found that only one-third of family-owned businesses survive the transition to second generation, with just a third of these getting to the next – a mere 1 in 10 chance of the business surviving for three generations. Often, the reason is insufficient planning.
There is also insufficient planning for the personal financial affairs of the exiting business owners as they transition from a business-derived income to a retirement income. Much thought is often given to the division of the estate with little thought given to the management of retirement income.
When the business owner moves from work into retirement, there will be portfolio considerations beyond the generation of investment income. These include, but are not limited to, such things as cost-effective withdrawals from tax-deferred accounts, various claw backs, different risk assessments, and income related to the ongoing business.