The family members decided not to sell the farm. Although the farm is a significant piece of the matriarch and patriarch’s net worth, they didn't need to sell it to maintain their lifestyle because they have accumulated enough other assets that generate income. Still, they are beginning to more closely evaluate other family-owned assets, said Lutz, and will come up with a plan should they choose at a later date to unload the farm.
The parents decided to invest in their son’s new business by using their other assets and they’re essentially becoming partners with him in this venture, said Lutz. The siblings are very glad the parents aren’t just gifting their brother the money, he added. The daughter who lives on and runs the farm is glad that her siblings now understand and appreciate the work she does there and no longer think she’s getting a free ride, he said.
Lutz emphasized the importance of having open and honest conversations about the reasons driving the sale of a family business, real estate or other assets. He thinks it’s important to begin these conversations at least three to five years ahead of a planned sale. Families should also look at how assets are titled, the cost basis of assets and whether the assets are held in trusts.
Lutz, one of three father-son teams at Intercontinental Wealth Advisors, also stressed that good decisions for clients are not just about numbers but also about family dynamics.