Sarita took careful notes of what occurred at yesterday’s family meeting. I’m not going to walk through all the details. But I think a summary might be helpful. We actually covered a lot of territory. But what has happened in the last 24 hours since the meeting is perhaps the most surprising–shocking–result of all.

Now where will we head?

I should probably note, first, that G___ changed some of the assumptions going in to the meeting. One piece–with which I’m much more comfortable than I was a week ago: after our discussion a week ago, he reduced his proposed yield from our primary company by 1% per year from last year’s unusually high number until it settles at (a still high) 10% annually.

I can at least imagine that we might average such returns. I couldn’t imagine the numbers he was giving me a week ago.

Minutes of Family Limited Partnership Meeting: June 7, 2007

1. Attendees: Immediate family, G___ (legacy planner), S____ (investment advisor who put us in touch with G____), L____ (our CPA), B____ (our attorney), V____ (an associate of B____, who specializes in family tax issues).

2. John opened the meeting with prayer.

3. Introductions: John introduced each person and shared a bit about each.

4. Some History: John talks about “How We Came to Be Where We Are Today”:

* Work history that

• Led us to own the unique, rather “missional”/purposeful company our family owns.
• Gave us the perspective that led us to want to focus our charitable efforts as we do.

* Corporate and family income history that

• Led to our current family corporate structures (income corporation; family limited partnership; ILITs; charitable foundations; etc.)
• Let us to approach our charitable giving as we do (relatively substantial gifts, on a narrowly focused range of projects within just a few key organizations).

* How and why we are pursuing the idea of “Legacy Planning”

* John’s understanding of what legacy planning is all about (based on books he’s read and G___’s own information)

5. John’s and Sarita’s Over-Arching Desire (which led to this meeting): To acquire next-generation participation and buy-in to whatever the final Legacy Plan is all about.

“While [our primary company] has had a one-year budget for the past four years and it is now quite accurate, we believe we need to think through a five-year budget. John would like us to emulate the Japanese who set twenty-year budgets. In the U.S., companies’ annual reports tend to look at what they have accomplished over the immediately past year; Japanese firms tend to focus on the future. We need to shift our thinking forward.”

6. Greg talks about his process:

	Diagnostic ————> Data Gathering, Current situation and Forecast
		Legacy Strategy ————> Define Vision, Goals, Priorities
			Wealth Plan ————> Design of Structures and Features
				Implementation

* We are pretty much done with the diagnostic section, and well along in the legacy strategy section.

* John provided G____ the Holzmann parents’ list of assets. G____ applied the numbers from our various structures and came up with a conservative plan for the amount of wealth the family should/could control in the future. G____ would like the family to work through the process to be aware of the significant resources available to them, and to plan for the future.

7. Show everyone the results of the Diagnostic process.

8. Discussion

Observations

• We plan to increase our charitable giving over time (from 30% to an ultimate 70% of total income).
• If [Sarita and I] were to die today, our estate is worth approximately $x million, and [just over a third of that total] would go to estate taxes.
• The estate taxes change often, and make it challenging for B____ and L____ to keep them minimized.
• In 2040 (when [Sarita and I] are in our 80’s), our estate should be worth close to $7.8x million, and the IRS might be expected to “inherit” very nearly 55% of that total.
• These numbers are true even if and as we (planned to) give away 70% of our income each year.
• By 2040, the family foundation could have as much as $14.7x million available to give away. As a big business, the foundation could require more employees than our current business has today!

• B____ recommends we add asset protection to avoid potential divorce problems.
• B____ recommends we raise our minimum income to 80K/year. And that we keep 1M in liquid assets.

9. Next Steps for the Family:

• Meet and decide what charities to support and at what percentage.
• Create a Charitable Remainder Trust Account.
• Decide how much seed money to leave in the foundation to grow for future years? (Or should we do as Mom and Dad have done to the present and, pretty much, disburse all the funds within 12 months?)
• Talk through who to lead the foundation. Who can write checks? What role should each family member take? What policies should we have in place?
• Talk through spouses’ roles. B____ recommends we limit meetings to our own immediate family members–i.e., not spouses. Do we agree? How much information should we make known outside the immediate family?
• Evaluate B____’s proposal regarding an Incentive Trust (e.g., for example: get $10K/year as long as you’re not smoking; fund will match earned income, provide education for your kids, etc.)
• How shall we work best with each other to maximize the benefits of each other’s unique skills, knowledge, etc.?
• Get a Trust Protector: someone who can make changes to the trust, and who keeps the trust in line with the parents’ dreams.
• Check with InKnowVision to set up structures correctly.
• Talk through how to disburse money to kids who want to start a business and grow it. How should we plan for cash flow movements?
• Write “Constitutional” rules for money usage.
• Get copies of G____’s plan into the hands of the kids.

Some additional items that came up during the meeting that we need to do:

• Work through who wants and/or should receive what belongings from Mom and Dad (i.e., for example, who gets the china).
• Think through what we as a family would like to accomplish over the next twenty years.
• Check with S____ to discuss Justin’s proposal that we should leverage the equity in our commercial building.
• Meet at noon on June 22nd so kids can begin to understand the meaning and purpose of all our family’s structures.

Some Basic Operational “Rules” for our family:

• Review family vision and values statement at each meeting and modify as needed
• Schedule formal family “business meetings” (like this) two to three times each year

And then there was (or is) one more item that popped up almost “overnight.” Totally unexpected on my part.

Every one of the kids came up to Sarita or me after the meeting (or through this morning) to say they would prefer we do not continue under G___’s tutelage/mentorship/process leadership. They “just don’t think he’s as strong a leader” as they would prefer. (Ouch!)

So Sarita recorded one additional action item for me to pursue:

• Contact InKnowVision to see if we can use their services without G____’s help.

Welcome, visitor!

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Sincerely,

John Holzmann

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This entry was posted on Friday, June 8th, 2007 at 5:09 pm and is filed under estate planning, family meeting, legacy planning. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.