A Wealth Creator, most frequently the Founder of the family business, must place an emphasis not only on the continued growth of the family business, but also the transfer of those interests from the first generation to the second. How should the first generation constructively preserve and pass on familial businesses and assets? If the Wealth Creators’ descendants have no interest in the family’s business, should the Wealth Creator approach the situation differently? While not all Wealth Creators are founders of companies, concepts behind familial business succession are valuable for all families alike.
A family should undoubtedly include concepts of succession, financial estimation and projection, familial governance, tax and estate planning, company management and ownership transition when developing their succession strategy. To build a sustainable family business that fits with the family’s philosophy, a bespoke set of rules regulating family activity and a separate set of rules regulating corporate activity must be written down and adhered to by all family members. As additional family members take part in and contribute to the family business, establishing effective governance is essential to preventing future disputes.
Generally, there are four ways to pass on a family’s wealth when it comes to business succession:

(1) Passing the entire family business on to the second generation: Family members, generally descendants of the Wealth Creator, take control over the entire business, including its ownership and management. Participating family members are widely encouraged to participate in the company’s operations in accordance with the business’ corporate hierarchy.
(2) Passing only ownership on to the second generation: In this scenario, only the ownership of the company (generally, the shares of the company) is passed on to the second generation, while both day-to-day management and executive functions of the company largely falls on professionals hired by the Wealth Creator and / or the second generation. Ideally, the second generation will serve as members of the Board of Directors, governing the company and making the most important decisions regarding the company’s new ventures and ongoing operations. 
This method of passing down the family business is especially tricky, since the professionals at the company and the second generations may find themselves increasingly at odds with one another. When not properly structured and monitored, this method often leads to the consistent decline of the family’s wealth and businesses. Thus, it is essential that those seeking to pass on only the ownership of the family business to the second generation consider professional assistance and guidance to ensure a smooth transition.
(3) Distribute ownership and management to both the second generation and professionals at the firm: In this scenario, it is imperative that the Wealth Creator clearly sets aside rules for the distribution of profits, company shares and management rights to encourage the second generation to join the business and incentivize existing and new managers to continue to perform.
(4) Liquidate the family business and pass down the proceeds of the sale to the second generation: While this method is likely the least popular among Wealth Creators, the sale of a family’s business is a big decision for any family and requires long-term planning and a thought out strategy.
When choosing between the four methods of passing on the family business, families must first consider their needs, wants, strengths and weaknesses. To ensure a successful transition, families must adjust their approach over time and reevaluate their strategy from time to time.