CASE STUDY : Sale of the Family Business

Making Family Preparations and Proper Wealth Planning

The family had always had a comfortable lifestyle. As the years went by and the family business prospered, the parents began splurging a little as the quality of their life improved. One day, the founding brothers (John and Steve) were approached with an offer to buy their business at a price that was difficult to refuse. Once the two brothers sold the family business, an enormous amount of sudden wealth flowed their way.

John immediately set up systems for the distribution of most of the windfall to his wife and children. Steve and his wife decided to designate the distribution of their windfall in this fashion: several large donations to their favorite charities, a portion set aside for the creation of a family foundation, a major financial gift to a long-time family friend, and a significant (although small in portion to their cousins) amount to their children.

John’s children immediately began planning great vacations and purchasing luxury gifts for themselves. Steve’s children were devastated and hurt. Instead of feeling grateful, they came away feeling that their parents must not trust or love them as much (as Uncle John loved his children).

A New Beginning

After a series of crucial and difficult conversations, an exploration of values and intentions, Steve and his family came to a new place of understanding. Steve was able to clarify his intentions and desires for his children, and share the experiences that guided him on his journey. And, Steve came to know his children newly. He learned about their capabilities (the extent of which he had been unaware), as well as their hopes and dreams. And most impressively, he discovered all the things they had been putting into place to ensure the achievement of their dreams.

Some restructuring of the liquidity funds took place. And, it was decided that the client would take the time to document the family story … with a strong emphasis on a lessons-learned perspective, as well as historical. He realized that while his children had a general knowledge of the family’s business, they really did not understand his thoughts and decision-making process, or the emotional challenges he experienced in starting and growing the business.

He also wanted to ensure that his grandchildren and future generations could benefit from the power of the family story. Steve and his wife began the process of creating purposeful and intentional attachments to their estate plans and trusts, with a goal of including clear documentation of family stories, and clearly defined intentions and guide lights for their children and future generations.