Many family business owners devoted long hours and tremendous energy to their companies to get them off the ground. They were frequently away on business trips, and they worked nights and weekends to make their dreams come true. When the children were young, the entrepreneur was often absent. Later in life, when the owner has climbed the ladder of success, he often tries to make up for the time when he was absent during the children’s early years by lavishing expensive gifts, cash, company stock, or vacations on them.
There are problems with giving family-business children too much too soon. While there are also pitfalls in not sharing any wealth with them, the greater threat is to overdo it and to shower them with too much.
It’s a good idea to offset the necessity of strategic, tax-planning gifts with the mandate of not spoiling the children. The goal is to strike a healthy balance, and there are techniques that make that possible. The best advice is to not allow your children to become dependent on you for handouts to support a lifestyle they couldn’t sustain on their own.
Family Business Institute