Family Business Transition

Situation: The founder and patriarch of a successful family-owned business was approaching retirement. Two sons, a daughter, and a son-in-law were working in the business, and the founder and his wife were looking forward to handing over the reigns of the business, traveling more, and increasing their involvement with charitable causes. However, they were concerned about the inherent risk of family business transitions, the ability of their current investments to generate the necessary level of retirement income, and the structure of the business transition.

Process: Century Wealth Management’s Guided Discovery process confirmed the client’s concerns about the business transition and uncovered the couple’s overwhelming desire to see the business grow and become a legacy for future generations. The process also revealed a higher risk tolerance and the need to maximize investment returns in order to achieve all desired goals.

Engagement:
Century Wealth Management began by helping the couple draft a comprehensive Family Wealth Mission Statement (FWMS), which contained a history of the family business, the couple’s philosophy of wealth, their estate intentions, and their investment expectations. They felt so empowered and inspired by this process, they immediately shared the result with their children. Using the FWMS as our road map, Century Wealth Management performed a thorough financial review for the couple and implemented the necessary solutions to achieve their goals:

• Analyzed past and projected spending.
• Performed risk analysis and review of all insurance coverage.
• Coordinated with tax advisor and attorney to implement a values-driven estate plan.
• Facilitated family meetings where the FWMS was introduced and the estate plan reviewed.
• Helped draft and implement family-business governance policies.
• Helped the business establish an independent board of directors.
• Initiated formal owner/manager education requirements and career tracks for family employees.
• Reviewed existing ownership transition plans and suggested modifications that would augment retirement income while saving on transfer taxes.
• Took over monthly bill payment responsibilities.
• Managed mail and correspondence while couple traveled.
• Provided compliant payroll and screening services for domestic help.
• Implemented tax-efficient, growth-oriented investment portfolio with prudent exposure to alternative investments in order to enhance returns.
• Implemented technology solutions that included a family calendar, hosted e-mail, online portfolio reporting, and a secure document storage site.
• Developed cursory financial plans and investment management for all three children.
• Compiled list of charities that appealed to family's desire for charitable involvement.
• Coordinated charitable giving.

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Our family wealth management case studies are based on a combination of actual and hypothetical client circumstances, fictionalized for confidentiality.