As a business owner, planning for your future can be difficult because of the many twists and turns that can happen both in business and in life. When you encounter situations, either expected or unexpected, you may need to make decisions that can have a major impact on you, your family, and your business. How you approach those situations can be critical to your long-term success.
More than twenty years ago, I met a husband and wife team that owned a very successful trucking business. She ran all the internal operations, customer service, billing, etc., and he ran all the outside operations, hiring drivers, shipping, delivery, etc. They built the business from scratch, starting the business in the Midwest, then moving operations to Atlanta. One of their adult children worked in the main office in Atlanta, and their other child ran a branch of the same business on the west coast. While their business could be cyclical, business and cash flow were good.
When I first met them, they were considering taking on partners in order to build the business. I had preliminary discussions with them on the importance of a shareholder agreement if they added on partners, and also the importance of having a buy-sell agreement between the partners in the event one of the partners was no longer able to work due to death or disability. They were not able to come to agreement with the potential partners, so they moved forward on their own.
Once the fallout from failing to establish the partnership cleared up, I began working with them more closely. They had goals to build the business, generate enough money from the business to fund their retirement, and, if their children wanted, to be able to pass the business to them in some form so they could run it and benefit from their parents’ lifetime of work and experience. Because of my clients’ retirement goal, and the fact that they were not sure if they were going to sell their business to fund their retirement or pass the business or part of it to their children, my recommendation for them was to begin building investment assets outside of the business. So, one of the first things we did was look at their investment portfolio and strategy.
It was the late 1990’s, and stocks were hot, especially tech stocks. They had already built a modest investment portfolio and the husband made the investment decisions. While he did make some very good stock picks, he was not very disciplined or diversified with his investment strategy, taking big swings on various stocks with differing results. He also tried to time the markets, which is very difficult to do successfully. The ups and downs of the market and his stock picks were causing him a lot of stress. So, working together, we implemented a more disciplined and systematic approach to investing that was aligned with their goals. This was very helpful to them and reduced his stress related to investing so he could focus more on the business.
They continued to operate the business and build their portfolio. They were considering selling their business when their CPA came up with a prospective buyer for the business. They did not have an attorney that had expertise in corporate mergers and acquisitions and related issues, so I referred them to an attorney in my professional network. The negotiations were difficult, and the attorney helped my clients tremendously in the sale of the business and the business real estate. Little did we know how valuable the attorney’s advice would be. While a significant part of the purchase price was paid up front, there were notes involved on the sale of the business and the real estate. A few years later, the buyer, the son of a wealthy businessman from South Georgia, ran the business into the ground and defaulted on the notes. However, everything ended up well because the attorney had gotten the real estate as collateral for the notes as well as a personal guarantee from the father of the buyer on all the notes related to the sale of the business and the real estate. In the end, my clients got all the money due them.
Unfortunately, shortly thereafter, the husband became ill with terminal cancer. For years, I had been trying to get them to do their estate planning and wills, but they were always too busy. Now, there was a sense of urgency. They did not have an estate planning attorney, so I referred them to another attorney in my professional network, and together we structured the titling of their assets in conjunction with putting coordinated wills and trusts in place to help shelter their assets from estate taxation while providing financial security for his wife and assets free of estate taxation to their children. The husband passed shortly thereafter.
For more than 10 years, I have been working very closely with the wife, now a widow, helping with her financial goals. In addition to managing her investments, I have helped her decide whether to keep or pay off the mortgage on her home, decide whether to keep or sell their primary residence after she relocated to their vacation home, set up 529 college savings plans for her grandchildren, put into place a strategy to help her children launch their own business, and figure out the best way for her to help one of her children buy a new home. She also did not have a CPA, so I referred her to a CPA in my professional network, and for years, the CPA and I have coordinated in order to help reduce the level of taxes she pays on her investment income.
We have been able to help these clients and their family navigate through the twists and turns of business and life by working closely with them, understanding who they are, and what they really wanted. One of our core beliefs is that our clients get the best results by working with a professional expert team. Our ability to lead, coordinate, and work with our client’s existing advisors, along with bringing in outside expertise from our professional network when they needed it most has made a major impact on this family. Currently, our client’s children are still running their own business, and she and I are working on maximizing and protecting the amount of her estate that will pass to her children and grandchildren, while still making sure that she can maintain her income and continue to live the life she is enjoying.