Over one-in-five Black adults in the U.S. tie their definition of financial success directly to business ownership, Pew Research reveals. This is a feeling many Black fathers in entertainment will recognize, and some of the industry’s biggest names like Jay-Z and Will Smith have built empires with this in mind. But building is only half the challenge as what you create also has to outlast you and generate wealth for your children once you’re gone. To achieve generational wealth you need to own what you’ve built, teach your children to run it, and give your business a legal structure that can continue without you.
Own your work
You can’t pass down what you don’t own. So always get an entertainment lawyer to review the contract before you make a deal. Recording contracts, publishing deals and licensing agreements alike can all strip you of owning your masters or your name or likeness (and sometimes permanently). Ask specifically who owns the work and rights, and what happens to them after the contract ends. Sometimes reversion clauses may be included and these return rights to the creator after a set time frame. Master P famously rejected a million-dollar record deal with Interscope Records and instead negotiated a distribution deal. This meant the major label moved his product but never owned his recordings. Master P therefore still had ongoing royalty income and control over how his music was used, and most importantly an asset he could pass on to his son.
Get your kids involved
Get your children involved in the business once they’re old enough, so they’re ready and know what to do when the time comes for them to take over. Master P signed his son Romeo to No Limit Records when he was just five. Ice Cube cast his own son O’Shea Jackson Jr. to play him in Straight Outta Compton, a movie produced by his company Cube Vision. These examples both show entrepreneurial fathers giving their children hands-on experience in the family business from a young age. But you don’t have to own a record label or movie studio to do the same and help your kids develop skills for the future.
Start by simply involving your children in conversations and decisions about the business and then give them responsibilities as they get older. A good place to start is with your live performance bookings. Brands allocate around 15% of their event budget to entertainment, which means live performance is a reliable and well-funded revenue stream to take seriously. Brands will often source talent through a live event production company, so that’s the channel many of these opportunities come through. From there, your kids can learn to weigh up offers and manage your schedule. They can even negotiate fees once they’re ready and all these skills will serve them across every part of the business.
Give your business a legal identity (and your kids a stake in it)
Your business needs a legal identity of its own so it can keep operating and generating money without you. In practical terms, this means you need to form a legal entity that exists separate from you and can therefore be managed and run by someone else. You can structure a family limited liability company (LLC) to include your kids as members (through a custodian or trust if they’re still minors). This gives them a legal ownership stake in the business and everything it generates while you’re still alive and running it. This can keep things simpler when you pass as their shares are already legally theirs and won’t have to go through probate.
You can gradually transfer more of the LLC to your children over time. This reduces what you leave behind in your estate, which can lower the estate tax burden as you’re gifting ownership incrementally rather than passing it all at once in one lump sum. Get advice from a business or estate attorney on how to set this up and whether to bring your children in as members now, and how ownership should be divided if that’s the case.
Building a family business in entertainment takes a lot of planning and hard work. Get this right and you’ll leave behind a legacy and real wealth for your children to build on.
