The Smith family owned a successful manufacturing business that had been passed down through two generations. The second generation were nearing retirement age and wanted to ensure a smooth transition of the business to their children. The Smith family recognized that they needed a comprehensive succession plan that would address their unique goals and needs.
Here are the benefits they experienced through comprehensive financial planning:
Clarifying Goals and Needs of the current ownership group: The first step in creating a comprehensive succession plan was to clarify the goals and needs of the owners. The family wanted to ensure that the business would continue to thrive under the leadership of their children, while also preserving their legacy of the founders and providing for the second generation’s retirement needs. Our advisory team worked with them to identify their specific goals and needs and created a customized plan to achieve them.
Discussing the Strengths of Existing Planning: The Smith family had already established some estate planning documents, such as a will and trusts. Our advisory team reviewed their existing planning documents and identified the strengths and weaknesses of their plan. They identified areas where the plan needed to be updated or modified to meet the family's goals.
Benefits of Bringing in Advisory Team: The Smith family recognized that they needed expert advice to navigate the complex succession planning landscape. They engaged a team of advisors, including an attorney and a CPA, to help them create a comprehensive plan that addressed their unique needs. Our advisory team helped the family understand the planning landscape and identify potential issues that could arise during the transition.
Using Trusts and Life Insurance: One of the key components of the Smith family's succession plan was the use of trusts and life insurance. The family created a trust to hold the stock of the business and used life insurance to provide liquidity to pay estate taxes and provide for a smooth transition of ownership. This ensured that the business could continue to operate smoothly even in the event of the unexpected death of a family member.