Businesses used to be transferred from one generation of a family to the next very regularly. While it no longer happens anywhere near as much these days, that doesn’t mean that you can’t leave the business you’ve worked so hard to build to your kids.

The passing of a business from one generation of family to another is known as succession planning. Most articles you read on the web refer to succession planning as the recruitment and placement of employees in a business to ensure its future. While Microsoft and Google might need subsequent managers, we are talking about family in our case.

Passing a business to your children might seem like a simple task. It is not. Not even close. There are a bundle of issues that have to be addressed. Perhaps one of the biggest is the tax impact such a transfer will have. Uncle Sam likes to collect as much as he has the nerve to from whomever he can get it. The taxes that apply to these situations are big ones.

The estate tax and gift tax have some of the highest rates you will find. Both will apply to your situation and can result in such a burden that the only way to pay them is to sell the business to raise cash. That, of course, is the worst case scenario, but one that unfortunately happens a lot.

Then there are the more practical issues that each family faces. Specifically, what if you have more than one child? If you are lucky, you can end up with a simple situation where only one child is interested in carrying on with the business. Most of us aren’t that lucky. Instead, more than one child is usually interested in running the business and both can have very different views of how it should be done. This puts you in an awkward situation as you can imagine.

How do you deal with all these issues? The answer is to start tackling them early on. There are strategies that can be employed to limit the tax damage from such a transfer. Time also allows for family dynamics to play out to the point where everyone can get past emotions and make logical decisions on the future.

If you hope to leave your business to the next generation of your family, acting now is the key. A financial planner or estate planning attorney should be able to help you with the process.

Barry Milton writes about succession planning and other financial planning subjects for UFCAmerica.com.