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A small business owner works hard all his life, then wakes up one day to realize he’s faced with another 80-hour-a-week job: figuring out how to protect and preserve the wealth he’s accumulated from income and estate taxes.
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Closely held business owners have unique problems. When successful, they are wealth creators. They employ people and provide a means to support families. They buy goods from other businesses, supporting suppliers and all of their employees. They face difficult decisions every day regarding sales, marketing, administration, human resources and operations matters. And, commonly, they neglect the wealth they accumulate because the business demands all of their time and energy.
High anxiety—over wealth.
Recently a successful closely held business owner called Private Wealth Advisors to discuss his unique problems. We learned of the many demands on his time and found his primary concerns to be those that are common among his peers. The business has generated a significant pool of liquid wealth and has grown valuable in its own right. The combined value of the liquid and illiquid assets is over $10 million. With great anxiety, this owner admitted that he knew how to run his business, but had no vision regarding the management of his family wealth and avoidance of income and estate taxes.
The issues in this type of case take time to sort out. Solving complex tax problems requires careful planning and analysis and requires the involvement of competent tax and legal advisors.
A tax-free pool for the kids
Over the following eight months the business owner met with his PWA advisor multiple times to design his business succession plan, create a formal estate plan including wills and trusts for him and his spouse, establish a gifting program to their children, and establish a tax-free pool of money available for the benefit of their children and grandchildren. In addition, we built a portfolio of high quality, blue chip stocks outside the company to participate in the growth of the stock market in a tax effective manner.
The end result of our work was a relieved entrepreneur with his work time focus on caring for his company and his free time spent enjoying his wife, children and grandchildren.
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