As I prepare for the inevitable, I am realizing how important it is to consolidate my records. I haven’t done this. I have plans . . . for what is to happen with my estate when I die. I have all the paperwork in order. Or so my advisors tell me.

But I haven’t prepared the kinds of records that will enable my survivors easily to tie up whatever loose ends my death will create. And that’s where Read the rest of this entry »

Whoa! I had the privilege yesterday morning of listening to a high-intensity presentation by E.G. “Jay” Link, president of Kardia, Inc., a legacy planning service, and John Bandimere, Jr., president of the Bandimere Speedway here in the Denver metro area. They were talking about Link’s methodology of legacy planning. (Bandimere is one of Mr. Link’s clients.)

I garnered several really worthwhile insights from the presentation (most found in Link’s book, but, for some reason, I found some of them presented with greater force or clarity this morning). I expect to share them over the next several days. Each one in its own post.

First insight:

In most families, there are two CEOs–and they are usually not the same person! One is Read the rest of this entry »

If you own a business, I’m sure you have heard about the value of incorporation. It is supposed to protect you, personally, from lawsuits . . . or, at least, from the potential effects of lawsuits.

As Allan Branch writes:

The Corporate Veil is the legal shield that protects an individual from being personally liable for the actions of his/her company. This only applies to owners, partners, board members, not employees or share holders. In this country a person, or a company may sue any other person or company for anything, at any time. But there is only one reason to sue, and that is to be awarded money. So if a person or company doesn’t have any money, then there isn’t really anything to sue for.

Unless of course, if there is no corporate veil, then they can come after you personally. This could leave you financially ruined for the rest of your life.

Now I read an article called Piercing the Corporate Veil: How limited is the liability of doing business as a corporation? by Joe M. Hawbaker, Attorney at Law.

Frankly, after reading Hawbaker’s article, I am astonished at how potentially lightweight the protection of a corporation may be. Read the rest of this entry »

Yesterday, as I read some more in Charles W. Collier’s Wealth in Families, I came across a section where he was interviewing Dr. Lee Hausner, a Los Angeles-based clinical psychologist and author of Children of Paradise: Successful Parenting for Prosperous Families. Collier quoted Hausner as saying,

I believe in a prenuptial agreement because healthy relationships should not be based on finances. A prenuptial agreement is a business contract, and . . . families should protect the business or financial assets of the family. [A prenuptial agreement] protects wealth that was created before the marriage. Signing a prenuptial clearly indicates that money is not the motivation for this marriage. . . .

Families of wealth should talk about prenuptials from the time of their children’s adolescence. They need to explain the importance of the wealth protection philosophy of the family and how this will enable the financial wealth to grow for future generations as well as providing lifetime benefits to the current generation. Family money should have nothing to do with the love between two individuals who wish to marry.

When discussing this idea with future in-laws, it is important to emphasize that, even with a prenuptial, everyone will benefit from this type of financial wealth preservation. There can be trips, vacation homes, educational trusts for children, and retirement security, for example. . . .

Hausner’s comments reminded me of some issues we faced in our family a few years ago when our daughter was about to be married.

The idea that we might need to think about documents like prenuptials had never crossed our minds. But there I was, a couple of months prior to the wedding, holding our annual corporate meetings, and I happened to mention that our daughter was soon to be married. Our estate planning and structures attorney immediately said, “She and her husband-to-be need to sign a prenuptial agreement.”

I was shocked.

Everything I had ever heard about prenuptials said they were simply and merely, if you will, “plans for divorce,” the ethical equivalent of accessories to a crime.

As we talked about the idea, our attorney explained things in a way that I can understand, and I came away with the conviction that he was right: Our kids, as beneficial shareholders of our family business, really do need to have prenuptial agreements, and the need for prenups is there with or without divorce. Instead, the creation of a prenuptial agreement ought to be viewed as a form of business insurance. And for well-meaning couples who enter marriage with open hearts and good faith, the presence of a prenuptial should bear no more ethical weight than the purchase of property and casualty insurance. Read the rest of this entry »

“The world’s oldest continuously operating family business ended its impressive run last year,” the article began. I just ran into the article yesterday on a news feed, but when I looked at the details, I discovered it was first published on April 16, 2007 and in areferred to an event that had occurred more than a year before that.

But the date of the article is probably not too important. The company that went bankrupt was over 1400 years old, having been started in 578 A.D. The president at time of bankruptcy was a member of the 40th generation to run the company. Read the rest of this entry »

Are you a business owner? If so, what is the real inheritance you pass on to your children?

Gary North, in the same article from which I blogged yesterday, suggests that the family business may not be part of it at all.

Potentially distressing insight, but if duly heeded and acted upon, it may make a world of difference–to your children and everyone they touch. Read the rest of this entry »

Last night, a couple from Ohio, serial entrepreneurs, talked a little about their personal “journey in giving.” It’s amazing how encouraging it can be simply to hear someone else express much the same idea you have in your own heart and mind.

The thing that jumped out at me in what they said — more than anything else — had to do with what they said about their latest company: “We are giving 100% of the profits to our favorite charitable causes.”

“????!!!!” –How can they do that?!? You have to pay taxes, at least!

This afternoon, at lunch, I was able to corner the husband and get a little explanation. Read the rest of this entry »