James Lea of Triangle Business Journal writes a colmn on the world of family business bizjournals.com here is a Q & A regarding your family business.

Q: Our family’s business is growing at a steady rate, and we’re trying to put operating procedures and systems in place to support it. Our lawyer is urging us to write a buy-sell agreement among the principal stockholders. The process sounds like a lot of hassle and expense. Is it worth it?

A: A buy-sell agreement sets up a requirement that in the event of the death or incapacitation of one of the owners of a company, that person’s relatives or heirs are obligated to sell his stock to the remaining owners. The intent is to keep ownership in the hands of those running the business and minimize conflict.

So while it’s not the perfect answer to all ownership-continuity challenges, a buy-sell agreement is usually a valuable building block in the foundation of a family-owned or other closely held business. Remember, though, that the agreement itself is only a nice idea unless the remaining owners have the capital to buy the departing owner’s stock. Most buy-sell agreements are pre-funded with key man life insurance or another reliable cash source.

And don’t forget to check with your tax advisor about the income and estate tax consequences of a buy-sell agreement. Exercising the provisions of a buy-sell agreement can be stressful enough without getting a surprise from the IRS.

Q: I’m in my mid-60s and chairman of a company that my grandfather founded many years ago. My daughter and son are officers of the business, and I’d like for them to take it over and keep it in the family. But the owners that preceded me have spread company stock throughout the family. If something happened to me tomorrow, I don’t know how my kids could maintain control of the business. Is there any way to straighten this situation out?

A: If you’re in your 60s, then it’s kind of late in the day to start thinking about this problem. But if your company’s stock is still in the hands of only the family, then you should be able to formulate a plan for clarifying and continuing ownership. First, get your objectives clear and in order: protecting and preserving the business, retaining management authority for those with management responsibility, distributing benefits of ownership fairly among those entitled to them, and others.

Then bring in some expert help – an attorney experienced in corporate ownership issues, your financial advisor, etc. … – to facilitate the necessary agreements among family members.

Q: I’ve thought about succession planning for the business I founded, but I’ve decided just to include it in my will. My wife and kids can do whatever they want with it after I’m gone, and I’ll save myself a lot of money and worry. Don’t you think that makes sense?

A: I’ve said it before, but only about a thousand times, so I’ll say it again. No company worth more than $10 in U.S. currency should be conveyed by will. The risk of value loss through estate taxes and the management burdens dumped on surviving family members should be reasons enough to keep even the biggest blockheads from willing their businesses. But apparently they aren’t.

So consider this. Your company is your life’s work. You’ve put a lot of yourself into creating, nurturing and growing it. Why throw all that investment to the wind by letting the courts and the tax collectors have the major voice in what happens to your business after your death? Take a little well deserved pride in the business you’ve built, and put some effort into preserving it and protecting your family’s longer term interests.

Go to work with your family on a succession plan, and get your attorney and tax advisor to link it to a good personal estate plan for you and your spouse. That’s the real way to save everyone concerned a lot of money and worry.

Lea is a professor at the University of North Carolina at Chapel Hill and a family business speaker, author and adviser.

Read more: Be prepared with good plans, be they buy-sell agreements or succession – bizjournals: