On May 20th, Family Business Radio host Pat Romboletti flew solo (co-host Meredith Moore was out of town) and welcomed lawyer Lisa Glauber Shippel , Rolader & Shippel, P.C., who has a large part of her practice devoted to estate planning of all sizes. In addition to being a certified mediator in the State of Georgia, Lisa grew up in a family business and is now the sibling not involved in that family business.
Lisa’s family has a business operating camps in the NY area, but Lisa opted out and chose the path to a law career instead.
Lisa and Pat began the discussion on estate planning by talking about the pitfalls to not having a proper plan in place. For instance, it complicates banking relationships and the loan process which the current recession has already complicated. It makes it hard on the heir in the business because it distracts them from taking over the reins. And, something Lisa knows about first-hand from her own family situation, if you have some children working in business and some not—how do you equably leave the estate to your children? What if the non-involved heir wants to get into the business now? If you want to leave the business to the child working in the business, how do make a fair distribution to your children not in the business? As you can see, the issues are varied and very thorny.
So–where to start estate planning process?
- First, sit down with a team of experts—attorneys, wealth managers, and CPAs. With their help, you will want to customize a plan based on your individual needs. “No form, no cookie cutter plan, will work,” Lisa said. “Every family-owned business has different assets and different goals. Your experts need to understand all the nuances of your business.” By the way, Lisa also pointed out that you need to have a sense of security that you can say anything to these people, without fear that you will be judged or information will be leaked. Honesty is the best policy when putting together a workable estate plan.
- Before the first meeting, gather a list of assets with their valuations. Also have in mind who your beneficiaries are. An end vision is nice to have, too.
- Be prepared to discuss succession planning as regards the management of the business. It is a complex process that professionals who know what they’re doing can make easier for you.
- There also needs to be a discussion about the way you want the business valued. That is, how to get it appraised—whether to go for the highest or lowest valuation—to reduce the in-fighting once you’ve passed.
- And the point at which to do all this? “Do it right away,” Lisa advised. No matter the size of your company, it’s always better—actually, cheaper—to have something in place.
- Finally, understand that much is out of your control. The estate plan is not a permanent document—it changes with laws, as your family circumstance change, as the economy changes.
In the end, it is a gift, a wonderful legacy, that you can give your children upon your death to have thought through estate planning issues. Don’t be daunted. While unfortunately there are no black and white rules on how to set up an estate plan, you can organize a team of trusted advisors to help get you there.
Listen to all of Lisa’s excellent insights by downloading the full broadcast here.