Believe it or not, determining equity allocation may be the easier part of these conversations. As it relates to management (who will run the business and under what reporting hierarchy), plans must determine who participates in management (family or not) and who will oversee day-to-day operations and/or serve in management positions. These conversations can be even trickier to navigate, as they blend personal feelings with professional performance in a truly unique way. These decisions must stem from longer conversations around responsibility, individual career goals, and skill sets, oftentimes with multiple generations, and sometimes involving non-family business leaders. Financial advisors can play a critical role by finding the most appropriate way to start and coach these discussions while keeping the focus on moving the estate planning process forward.
Leverage Specialists To Achieve Success
Financial advisors can sit at the helm of the business estate planning process, guiding their clients through the tough decisions to achieve success. That leadership comes with the responsibility to leverage technical specialists when necessary.
Estate planning attorneys can be important members of the business estate planning team. Knowing when to pull them into the process is critical. Leveraging other practitioners will help the client in the decision-making process by providing technical expertise and consultation around specific rules and documents.
Financial advisors could be invaluable resource to estate planning attorneys who are creating a trust for clients. While these conversations may be difficult to have, especially so early in the planning process, it’s crucial to avoid probate and ensure a fair distribution of assets upon succession and/or death. Together with the estate attorney, work with your client to walk through each vehicle to help the client make an informed decision. Compare options to be sure that everyone is taken care of.
An estate planning attorney is a big part of this process, as they can make sure that everything is done correctly and according to law. Legal documents must be compiled, such as:
• Basic Will
• Revocable Living Trust
• Durable Power of Attorney
• Health-Care Directive
• Irrevocable Life Insurance Trust
• Buy-Sell Agreement
As careers change and many high net worth individuals take a new risk for their career and income stream, financial advisors are equipped to couple the new business’ goals with that of their client’s existing estate plan. With the experienced professionals that provide legal, tax/accounting, investment banking or financial/investment advice, new business founders are able to rely on their advisors’ experiences and expertise while aligning it with their previously determined long-term goals. In turn, families can count on their financial advisors to help them achieve business, personal and family-wide success.
Sarah McDaniel, CFA, is head of UHNW Content & Analytics and head of the Art Resources Team (ART) at Morgan Stanley Private Wealth Management.