Case #5 Transferring the Family Business

Family Case Study #5
Transferring the Family Business

Original SituationStrategies UsedMaximize Family ValueMinimize TaxesOptimize Giving
  • Couple in their early 50’s and had 4 sons.
  • His father started a family business and ownership was passed to the client, his brother, two sisters, their spouses, and 7 members of the third generation.  Including the father there were 16 owners
  • The client and his brother were leading and operating the company, but they were grossly under compensated..
  • None of the client’s nieces or nephews were interested in running the family business and his sons were interested but still in college or high school.
  • company was filing as an S-Corp and had substantial income being reinvested.
  • We had the client and his brother distribute excess retained earnings and convert to a C-Corp.
  • The company bought back the stock from all family members except the client, his brother, and their wives.
  • The company increased the client and his brother’s wages to a competitive level.
  • We developed a plan to bring the client’s sons into the business after spending time working in other industries and determined they wanted to work in the family business.
  • We utilized a self-funded buyout with a gift of stock to their sons and a Charitable Remainder Trust with the company purchasing and retiring the stock.
  • We utilized life insurance to equalize their sons’ inheritances if any decided not to be involved in the family business.

Case studies are for informational and illustrative purposes only and not to be considered a guarantee of results.
Actual results will vary with each situation.