Recap: March 4th Broadcast-3 Experts with Strategies for Preserving Wealth

Loraine DiSalvo, Christina Napoli, Anita Pittman

The Family Business Radio broadcast on March 4th offered a penetrating look at the various aspects of finances for the family-owned business. Insights into this integral business sector where given in a round-table discussion format by Christina Napoli, VP-Commercial Banking for First Citizens Bank, Anita Pittman, CPA and Tax Partner with Cherry, Bekaert & Holland, and lawyer Loraine DiSalvo, Partner with Morgan and DiSalvo, moderated by Family Business Radio hosts Pat Romboletti and Meredith Moore.

Loraine set the stage by sharing her experience in the areas of estate planning, tax planning, and succession planning, in which she has often found that the bulk of a business owner’s estate is the business itself, and therefore illiquid. It is a circumstance that increases the difficulty of the estate tax situation and underscores the need for pre-event planning. One document that she highlighted as especially critical was the buy/sell agreement, which spells out the person or entity that has agreed to assume operation of the company, either temporarily or permanently, should something happen to the primary owner-family member.

From her perch as a CPA focusing on partnership taxation, executive compensation planning, and merger and acquisition work—plus having grown up herself in a family-owned business—Anita suggested that, if the weak economy has depressed company share value, now is a good time to think about transitioning some of the ownership to other family members.

That opening gave way to a lively and frank discussion about passing on ownership to children, especially when the children don’t welcome it. Loraine cited this circumstance—forcing unwanted ownership onto children—as the number one reason for the failure of family-owned businesses. Anita discussed the resulting conflicts that erupt among the children, stressing that upfront planning and transparency head off those problems.

As a banker, Christina pointed out that unwilling heirs affect the availability of financing as the bankers try to understand where the control now lies. Her rule of thumb is that if a person has 20 percent or more of ownership in the business, then they need to be involved in the day-to-day business and adding to profitability.

From this point in the broadcast, the participants delved into a range of topics that affect all family-run businesses:

  • Structuring your business model appropriately from a tax POV.
  • The definition of “long-term” in these fast-changing times. (Hint: it’s not five years anymore.)
  • Setting up incentives for family members and non-family members.
  • Awkward Conversations 101. Apparently, there are no magic words when it comes to the discussion of money and family.
  • The view of family-owned businesses in today’s banking industry.
  • A riveting discussion on the nearly-inexplicable status of the federal estate tax.
  • Best ways to use your team of trusted advisors.

Be sure to listen and download the Podcast to hear all of the details on the above topics.

In the end the overarching theme of our experts was echoed in the 3 tips that our guests gave at the end of our broadcast—plan  plan, plan—plan early, plan often and review frequently.  And then plan some more.  Oh, yes—and throw in a mighty blast of clarity. All five participants agreed that these two key ingredients, planning and clarity, will help family businesses build wealth and preserve it.   Loraine also left our listeners with a great book recommendation:  “How to Run Your Business So You Can Leave it in Style” by John H. Brown.

We extend a big thank you to our three knowledgeable experts and newest members of the Family Business Radio community.  You can contact our guests as follows:  Loraine DiSalvo, Partner, Morgan and DiSalvo, PC, www.morgandisalvo.com,Email: ldisalvo@morgandisalvo.com–678-720-0750//Christina Napoli, VP First Citizens Bank, www.FirstCitizensonline.com, Email: christina.napoli@firstcitizensonline.com–678-624-4880// Anita Pittman CPA, Partner Cherry, Bekaert, Holland, www.cbh.com, Email: apittman@cbh.com–404-733-3221

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