12 May Legacy or Liability? Rethinking the Family Business Succession Myth
By Mike Schmitt, The Rubra Group, LLC
“Your last name might be on the door, but stewardship is what keeps you inside.” This powerful idea underscores a growing truth in family enterprises: legacy alone is no longer a sufficient reason to hand the business to the next generation.
Every year, thousands of family business owners face one of the most emotionally complex decisions in their journey: whether to transition their company to the next generation or pursue a different path. The pull of tradition and family loyalty is strong. There is an understandable desire to see a child take over what a parent has built. Yet increasingly, responsible families are recognizing that continuation should not be assumed—it must be earned.
At the heart of this choice is the concept of stewardship. Stewardship is not about titles or bloodlines. It is about responsibility, capacity, and vision. It requires leadership that can grow the business, adapt to change, and serve the interests of both the company and the broader family enterprise. Sometimes, that leadership comes from within the family. Sometimes, it does not.
We must allow space for families to make this decision without guilt or shame.
The notion that every business should pass from parent to child is outdated and, in some cases, dangerous. It can lead to placing unprepared individuals in leadership positions. It can trap next-generation members in roles they never wanted. And it can compromise the very thing the family sets out to protect its long-term wealth and reputation.
Stewardship shifts the conversation. Instead of asking “How do we keep this in the family?” the better question becomes “What is the best way to preserve and grow our legacy?” This opens the door to a range of possibilities. It may mean preparing children to be wise owners but not operators. It could involve selling the business to a trusted management team. It might even mean transitioning to a family office structure, where capital is redeployed into new investments that align with family values.
Families who embrace stewardship over sentiment often find greater harmony in the long run. They reduce the pressure on children to fulfill roles they are not suited for. They create opportunities for meritocracy and professionalism. And they allow the family to evolve without being handcuffed by legacy roles.
This does not mean that involving children in the business is wrong. Quite the opposite, when done well, it can be an extraordinary success. But it must be approached with clarity and intention. A family member should enter the business because they are the best candidate, not the only available heir. They should be trained, mentored, and tested. And their appointment should be part of a deliberate governance process that prioritizes the needs of the business and the family’s long-term vision.
Some of the most successful multigenerational families have established formal policies to address this. They may require next-generation members to work outside the business for a period. They may mandate education in business fundamentals. And they often separate governance of the enterprise from day-to-day operations, allowing family members to serve as stewards of capital rather than managers of the business.
This is not a rejection of legacy. It is a redefinition of it.
Legacy is not preserved by clinging to the past. It is protected by ensuring the family’s values, capital, and influence remain strong and relevant across generations. That often requires hard choices — and the humility to realize that stewardship sometimes means stepping aside.
As advisors, community members, and leaders, we must support families in making these choices with courage. We must help them see that honoring a founder’s legacy is not about keeping a name on a building. It is about ensuring that what was built can continue to grow, serve, and thrive.
The decision not to pass a business to the next generation is not a betrayal. It is, in many cases, the most faithful expression of love, respect, and responsibility a founder can make. Because when stewardship is the standard, the business has a chance to outlast its original name—and serve as a vehicle for legacy that adapts, evolves, and endures.
If you have any thoughts on this and would like to have a conversation about how some families are integrating the use of AI tools into their enterprises, we would be happy to have a conversation.
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