Generational Wealth Following A Business Sale
Preservation, Protection, Legacy.
When a family experiences a liquidity event that will impact the lives of generations to come, it is crucial to have a capable advisory team in place. A few key objectives may include income tax mitigation, estate tax mitigation, asset protection, estate liquidity, cash flow management, tax-efficient investment management, as well as family charitable strategies. What ultimately determines the structures and vehicles employed are the values and objectives of the first generation. Effective planning up front can remove some of the burden surrounding the wealth created, and refocus the resources as a tool to help the family realize their objectives and goals. Financial education and training for younger family members is also important to get them acclimated and prepared for future wealth transfer.
Our client founded a nationally recognized financial services firm that he built from the ground up. He spent his career building the business and was fortunate to be recognized as one of the top firms in the industry. When the transaction occurred, the clock started running to get his financial house in order. Though he had completed some risk management and estate planning years ago, he had outgrown the strategies which were once adequate. In addition, the sale graduated him into the spectrum of wealth where he would be certainly subject to estate taxes without implementing any advanced planning techniques. One of the first things our client wanted to do with his windfall was to give back through gifts to build and improve regional facilities for high school students. We always get excited when a client has both the intent to minimize taxes and the heart to be generous – because it is easy to accomplish both at the same time. With such a large tax year ahead of him, we knew we had some great solutions to maximize his tax savings and impact the organizations important to him. Lastly, our client wanted us to begin working with his adult children to set up accounts and acclimate them to the process of investing.
It’s no secret that selling a business generates complexity and new a new type of asset to manage. Many business owners had capable teams supporting them over the years while they lead their business – it should be no different after a sale. Our client desired actionable and consolidated financial information at his fingertips, with a single advisory team to quarterback his planning. He also wished to maximize tax savings, his impact on the community, and set up structures to benefit his family for a long period of time. With a son and daughter in college, he asked our team to step in to start independent wealth management relationships with each of them. In order to make the most effective decisions on his charitable endeavors, our client asked the Benchmark team to quarterback the framing of the family charitable strategy in addition to the creation of the vehicles to carry out their wishes.