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Wills and Trusts - How to Keep Your Family and Business Matters Private During Probate

As a succession planner, I am in constant dialogue with my clients’ attorneys about appropriate estate planning structures. Depending upon the state of residency, the training, and the perspective of the attorney, the dialogue can be interesting, especially when it comes to a few of my preferred structures, simple Pour Over Wills and Revocable Trusts. As we discuss these options, I commonly hear, “We can accomplish the same objectives with a Testamentary Trust Will.”, which is a Will containing a trust that is funded after the completion of probate. However, my classic response is, "Our clients who own a family business, and to varying degrees are subject to greater publicity and scrutiny, would prefer to remain private, and depending upon the state, avoid the hassles of probate, which cannot be guaranteed with a Testamentary Trust."

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How Giving Too Much to Your Kids Can Impact Your Succession Goals

There are 3 common "giving" pitfalls that create future havoc on your succession plan.  Most of the time family business owners believe they are doing the right thing, but are unaware of the long-term impact of giving or creating unearned rewards such as a job, title or a paycheck.

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Operating Your Business Like it’s Always For Sale

In early October, Berkshire Hathaway announced it had agreed to buy Van Tuyl Group, the nation’s largest privately held auto dealership group. Warren Buffet, having dipped his toes into the automotive industry by taking a stake in GM, sees the opportunity to replicate Van Tuyl’s success by consolidating dealership groups throughout the Sunbelt.

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Transfer Stock: Gift or Sale

Recently a business owner approached me with the following: I am considering transferring some company stock to my son and possibly some talented managers. He stated, each person has made significant contributions to the business and a few of them feel they have already earned the right to some of the stock via sweat equity. He asked, should I gift or sell the stock to them?

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Are You Missing Out on the Successor Right In Front of You?

 "Loyd, thank you for coming to see me. Please sit down," Mr. John Doe, the elderly but fit gentleman, offered as we settled into his office. Settling back into his chair, he continued. "My accountant attended one of your succession planning seminars and suggested we talk. We have three dealerships. I have a son who is pretending to run our stores. I also have a daughter and a son-in-law who work here. I own 35% but 51% of the voting stock. I don't know what to do," he continued apparently relieved to have someone to speak to. "My son will not listen to me. And unfortunately he is the only capable family member. I doubt he works 40 hours a week; he says he works from home. I know he trains for marathons, coaches his son’s baseball team and never misses a school meeting. Meanwhile, the businesses underperform. When I threaten to fire him he just smiles and says do what you have to do. My son-in-law wants me to appoint him the Dealer but he's had some issues with drugs," he offered with a conciliatory shrug of the shoulders. 

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When-ing and Then-ing: A Common Succession Planning Pitfall

I recently agreed to be the wingman for Dr. Merlot who was calling on a succession planning prospect, Victor. Doc described this gentleman as a 65-year-old, second-generation owner of 17 dealerships with a son and a daughter employed by the dealerships and another daughter who was not actively employed in the business. 

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Fifty-Fifty, Not So Nifty

As a business succession planner, I encounter the full gamut of dealership business structures, Regular C corporations, S-corporations, partnerships and limited liability companies. I have had clients owned by public corporations and foreign corporations, and even one client who boasted he was the only sole proprietorship dealership in the United States. That relationship was short-lived - he was not pleased with my response.  

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How to Assemble Your Succession Planning Team?

Engaging in the succession planning process can be a daunting task. Being transparent, identifying current and potential issues and developing a plan for the greater good of the business and family requires substantial energy. To add further complexity to this process, getting family and key managers to mutually come together for a shared purpose can seem impossible at times. However, you have decided in order to reach your objective, you’ll need help. So, who should be on your team?  

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Are You Overpaying Your Children? Be Aware of the Potential Long-term Impact

So, in my first two posts, How "Over Giving" to your Kids Can Impact Future Succession Goals, and Did Your Child Earn That Title? The Impact of Giving What One Doesn't Deserve, on this subject I have discussed how a past pattern of giving can have a negative impact on the eventual gifting of business assets.  The previous posts focused on two common areas where business owners "give" to their children, which can create havoc on the business, successor development and family dynamics - giving your child a job or a title without earning them. 

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Did Your Child Earn That Title? The Impact of Giving What One Doesn't Deserve

In my last post How "Over Giving" to your Kids Can Impact Future Succession Goals, I discussed how past gifting behavior can impact and create unnecessary challenges the transfer of business assets to your children. A common first thing given to children, which sets a tone for future gifts is a job, I recommend for you, your business' sake and for the development of your children, they should earn it.

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How "Over Giving" to Your Kids Can Impact Future Succession Goals

The eventual transfer of business related assets to children is a common concern shared amongst family business owners. As a result, client meeting discussions often turn towards evaluating the most effective approach. 

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Feedback – The Breakfast of Champions (and High Performing Cultures)

Feedback is a peculiar animal.  While many of us tell others we want it, we often abuse the messenger brave enough to give it.  Or, if feedback is delivered by a “system”, we look for faults in the way the system was designed to deflect the message and save or rescue ourselves from embarrassment that usually comes with looking foolish.  

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How Do I Build Bench Strength in My Organization?

Talk about bench strength occupies quite a bit of time in board rooms and kitchens all around the world.  I’ve read some articles that talk about the “marriage” between succession planning and successor development; and I’ve read others that talk about how hard it is to find people suited to be the next generation of leaders.  Still others present business owners and leaders with something akin to “silver bullet” coaching that can get people ready overnight.

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Don’t SWOT the Small Stuff

Probably since the beginning of strategic planning, business owners and their key leaders have been sitting around tables talking about Strengths, Weaknesses, Opportunities, and Threats.  Maybe you’ve even done engaged in the SWOT process with your team.  The primary reason for a SWOT analysis is to identify and deal with the critical issues affecting your business.

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OPPORTUNITYISNOWHERE

Take a close look at the letters above. Now, without changing the sequence of the letters, break those twenty letters into a sentence.

If business has been tough or you don't feel passion or commitment from your people, your sentence might read "Opportunity is nowhere." You might be thinking, "What have I done with that list of business brokers? I know it's around here somewhere."

Tempting as that broker search might be, don’t jump at it. Those same twenty letters can create another sentence: "Opportunity is now here." Same twenty letters, same and yet a completely different approach to finding a solution.

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How Financial Independence Can Impact Succession Goals

What is financial freedom? In the context of business succession, financial freedom means accumulating sufficient liquid resources independent of the business whereby the owner doesn’t have to rely on business profits to maintain their standard of living.  Why is attaining financial freedom so important for a business owner in a family business setting?

Developing wealth independent from the business is paramount to an effective business transition. Financial independence affords the owners freedom to transfer some managerial and leadership responsibilities to successors without fear of them burning the entire house down. In essence, you have the opportunity to see your successors in action and determine if and to what extent additional coaching and mentoring may need to take place.

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Complications of an In-Law Employee

Succession planning takes a business owner in many directions. Not all families have natural successors, and not all family members are cut out to work in a family business. Furthermore, in many circumstances business owners desire to supplement the finances of unemployed family members. Therefore, I am commonly asked what to do about employing in-laws. My common answer is to tread carefully; hiring an in-law is a big deal and a complex undertaking.  

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Succeeding the Old Fashioned Way

The look on my face when the 54 year old dealer told me that he was promoting his 28 year old son to be the GM was a dead give away. “Why is that a problem? – I was a GM at that age!, he said.” And obviously it worked out great for this dealer, so why was I questioning his decision to promote his son? The issue I told him is that he grew up in an entirely different set of circumstances than the world his son experienced and the maturity levels created by such are hard to replicate. 

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Planning Techniques

“Is there anything your father should have done that he didn't regarding his estate planning?" "Yes" said the son...

That question was posed by the father’s original dealership partner (now in his 80’s) to the son several years after the father’s death at a meeting in which I participated. The son, who is a highly successful auto dealer, was very emphatic in his response. “Dad was unwilling to do anything because he thought he would be losing control. We were lucky – the timing of his death was during good market conditions when our dealership products were hot and the real estate market allowed us to sell assets needed to pay the estate taxes. We could have lost everything!” 

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Living in Dad's Shadow - When Kin Can Cash In

"I love coming to work every day!” exclaimed the 81- year old dealer. No doubt and he definitely still had plenty of gas left in his tank! Energetic and mentally sharp, his idea of “retirement” was to come in to work at 10:00 a.m. (“but I stay at least until 5:00 p.m.”). As the founder of his dealership empire, he was extremely proud of what he had accomplished and still felt he could contribute and run the business if he had to. So what’s the problem? 

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