My parent is coming into a fairly sizable inheritance. They want to invest in my business. Looking for guidance on how to proceed.

 

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My parent is coming into a fairly sizable inheritance. They want to invest in my business. Looking for guidance on how to proceed.

My mother is coming into a semi-sizable inheritance from the death of my grandfather. She is set for retirement and has offered to invest in my business. She knows that we’ve had a tough year between Covid and some supplier issues. We have been trying bring production in house for 5 years and her money can help this happen without heavy loans. Other than a lawyer, are there any other resources we should acquire. I have not discussed this with my husband who is equal owner of our business. I have one sister who is being given some of the inheritance to buy a home. My mom is sane and we have always had a good relationship. Does anyone have any thoughts. Advice? Words of wisdom?

My parent is coming into a fairly sizable inheritance. They want to invest in my business. Looking for guidance on how to proceed.

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5 Replies to “My parent is coming into a fairly sizable inheritance. They want to invest in my business. Looking for guidance on how to proceed.”

  1. Yep. Don’t do it. Family and business very often does not end well. It’s one thing to lose a friendship over business. It’s quite another to lose a parental relationship over business.

    Not saying yours won’t be the exception. But the odds are not in your favor.

  2. I would suggest that she give the money to you as a loan with a mutually beneficial interest rates, for example, SBA loans are currently 4-13%. Personal savings interest rates are less than 1%.

    Take the loan at 3% which saves you money and gives your mom a better rate than she can get in the bank.

  3. Not a business owner, but here are the questions I personally would have to ask myself, when accepting this money.

    1. Is this a loan, or a gift?
    a. If this is a loan, can you afford this loan?
    b. If this is a gift, will your business sustain itself with this gift, going forward? Or will it only let you limp along for a few months / year.
    2. Will you be able to mentally handle the possibility of this becoming a point of stress in your family, meaning, can both you and your mother detach your business and personal relationship.
    3. Have you done your personal due-diligence regarding how that money can/could be used to better either your mother’s life, or your personal life, rather than your business? If you haven’t, then perhaps you should do the calculus in that regards.

    Hope for the best for you, it’s a tricky spot to be in.

  4. Folks like us tend to do what we do… Because we are so “different”.

    Of course, taking care of your family doesn’t make “business sense”.

    Which makes us “different”. 🙂

    ​

    Do you agree?

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