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Karl R. Bareither, CLUWealth Transfer Specialist
Ph: 805-595-2089 Email: [email protected]
Wealth Transfer Planning – Overview
Family & Business Objectives
The FBR System
A holistic approach to planning, not transactional
Treats wealth as more than just property
Recognizes the importance of open family communication to the planning process
Acknowledges that planning is a journey, not a destination
Family and Wealth
What is your Definition of wealth?
Family Business Statistics88% of current family business owners believe the same family or families will control their business in five years, but succession statistics undermine this belief... •Only about 30% of family and businesses survive into the second generation •12% are still viable into the third generation•only about 3% of all family businesses operate into the fourth generation or beyond
1Family Business Research Institute
The Need For More Effective PlanningStatistics reveal a disconnect between the beliefs and reality.
This information indicates lack of family business succession planning.
This was confirmed by our own survey which indicated the importance of including all family members.
Wealth Transfer Challenges
The ownership succession planning issues that seem to be the most common areas of contention or omission in family business succession planning are:
1. Technical mistakes
2. Planning in a vacuum
3. Leaving the business to the surviving spouse
4. The challenge of treating children equitably
Secrecy ControlPower
AutocraticHead/Ego
OpennessSharing
KnowledgeCollaborationHeart/Spirit
Creating and Preserving a Business
Creating Transferring
From owners only… …to the entire familyA unique approach
to planning that
involves the entire
family.
The Family and Business Renewal ModelPhase IExamine
Current Plan
Phase IIDevelop New Plan
Phase IIIPresent &
Implement Plan
A proven success
model that has saved business owners
millions of dollars while
preserving the family business.
Interview each person individually Business family members and
spouses Passive family members and
spouses Key employees
Step 1: Individual Family Interviews
Clarify personal goals, concerns and intentions of each family member
Step 2: Determine Family Objectives
Identify family and business expectations and concerns.
Review existing owner and business documents: Financial Statements Income Tax Statements Life Insurance Policies Business Agreements Wills Trusts
Step 3: Analyze Current Plan
The Wealth Transfer Specialist will:
Completion of Phase I
Understand the existing wealth transfer plan
Understand the goals, concerns, hopes and dreams of each individual family member
How, when and to whom will leadership of the business be transferred?
Step 4: Examine Transfer Options
Wills Trusts Gift Buy-sell agreement Reorganization Sale (family members or
non-family buyer) Charitable arrangement
Meet with trusted owneradvisors, examine options,
and draw conclusions
Step 5: Seek Advisor Input
Step 6: Develop the New Plan
Determine wealth transfer options
Organize information Seek to satisfy both family and
business concerns Promote decision-making that
is both sensitive and pragmatic
The WTS
Completion of Phase II
Creates a written report detailing the new plan
Determines the most viable options for transferring the family’s wealth
Step 7: Present New Plan
The Family Retreat:
Present new plan Examine business
financial, legal and tax issues and options
The art of planning
and facilitating
a family retreat is
part of the FBR
System
Consider viable options for providing needed liquidity
Sale of assets
Loan
Insurance
Sinking fund
Step 8: Consider Liquidity Options
Obtain agreement to implement plan
Complete financial, tax, and legal requirements
Monitor plan progress
Step 9: Implement and Monitor Plan
The Family and Business Renewal ModelPhase IExamine
Current Plan
Phase IIDevelop New Plan
Phase IIIPresent &
Implement Plan
12 3
4
56
8
9 Your Wealth
Transfer Plan
7
What are the costs and benefits?
Cost dependent upon: scope of work number of family members complexity of business Expectations
Defining Your Investment
Free initial interview Fee or No Fee Option
1. It’s a family affair not just an owners affair
not just a transaction
not closed and secretive
not a telling one
not exclusion
not closing discussion
1. It’s a family affair
2. It’s a process
3. It’s an open agenda
4. It’s an asking format
5. It enhances family life through inclusion
6. It’s a way to open family dialogue
12 Principles of Family and Business Renewal
7. The greatest resource is people7. The greatest resource is people
not plant, equipmentand real estate
not one at the expense of the other
not a whitewash
not excluding anyonewho may differ
not a free-for-all or anger tirade
not a risky venture
8. It deals with both external and internal matters
9. It ensures an examination of all issues
10. It seeks input from owner advisors
11. It uses an objective planner as a facilitator to plan a family retreat
12. It assures a money-back guarantee if not totally satisfied
12 Principles of Family and Business Renewal
We encourage ongoing discussions to determine the business owner objectives, and those of the family.
Comments & Questions
