A third-generation family business owner was ready to sell his company in the manufacturing industry when he turned 80 years old. He came to an agreement with a private equity firm and was working through a deal when he came to Wescott for guidance.
The client is the patriarch of a large family and his utmost concern with the sale of the family company was how to disperse the earnings amongst his descendants. He came to Wescott knowing that he wanted to establish a trust for each of his six grandchildren, but he was unsure how to navigate the tax ramifications as well as the ongoing nature of the deal as it included multiple parts, some closed and some ongoing.
Wescott worked with the client to establish an irrevocable living trust with his grandchildren as beneficiaries. The living trust would reduce his tax liability by removing the assets from his taxable income and avoiding gifting tax. It also protects the assets and offers lifetime giving to his grandchildren as the assets will not be subject to estate tax upon his death.
While the client was hyper-focused on taking care of his family, Wescott noticed that he had not updated his own estate plans even before the sale occurred and saw the opportunity to reduce some of his spending. He had a term-life insurance policy he had purchased when he turned 60 that he no longer needed and could reduce or stop paying the premium on.
He also expressed interest in charitable giving but did not have anything laid out in his financial plans. Together, Wescott and the client developed a philanthropic strategy that included setting up a donor-advised fund (DAF). The DAF enabled the client to establish a philanthropic legacy and give to the charities near to his heart while taking advantage of upfront tax deductions.
Letting go of a family business can be an emotional experience. Having to worry about family planning and asset allocation at the same time can distract from other important pieces of personal financial and estate planning. Wescott provided peace of mind and helped the client ensure that his wishes for the next generation were met while setting him up to live the rest of his life comfortably.
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