POTENTIAL NEEDS / CONSIDERATIONS

Family Security / Survivor Income: Will the family business provide sufficient dividends to support the family in the event of the principal’s death? Will the family be forced to liquidate part or all of their business interests? Will the family of the deceased partner pressure the surviving partners to manage the company towards liquidation or sale to maximize dividends instead of increasing growth?

  • Applicable for clients wishing to ensure the future financial security of their family
  • May replace income of family member and/or lost opportunity to grow wealth
  • May also be designed to meet legacy planning needs

Debt Repayment: Who will pay the liabilities of the deceased? Will the deceased’s creditors call outstanding loans? Will assets have to be sold to pay off outstanding debts? Will assets have to be liquidated at fire sale prices? Does the deceased have assets that he/she would like to remain in the family that are being used as collateral for a loan? Would creditors call personally guaranteed corporate debt of the deceased?

  • Applicable for clients wishing to repay outstanding liabilities and pass assets “clear”
  • Protects against creditors calling outstanding loans
  • Prevents assets having to be sold to pay off outstanding debts

Inheritance / Estate Tax: How will the family of the deceased generate the liquidity to pay inheritance / estate taxes? How will the estate be valued? Will assets have to be sold to pay these tax liabilities? Will the family have the flexibility to liquidate assets at fair market value? Will it be acceptable that the heirs’ inheritance will be eroded by taxes?

  • Applicable to clients with potential death tax liability in home or foreign jurisdiction
  • Provides funding to pay tax
  • Prevents assets from having to be sold or leveraged to pay tax liability

Business Continuity: How will the death of the principal affect the family business? How will the death of a non-active shareholder affect the business? Will the existing shareholder be happy to partner with the deceased shareholder’s heirs? Will creditors, joint venture partners, employees and others react negatively to the death of a partner? Will they react negatively towards the involvement of new shareholders?

  • Applicable to clients with potential corporate exposure to unexpected capital needs •
  • Provides funding to pay beneficiaries for the value of the partner’s company shares at death •
  • Prevents company from having to be sold or leveraged

Estate Equalization: Will the deceased be able to transfer assets in the manner he/she wishes? Should the eldest son receive the same share of assets as the other children who are not active in the business? Would the deceased be interested in passing business assets to his son and non-business assets to other heirs? How could this be accomplished? What other estate allocation alternatives exist? Will the deceased have to comply with forced heirship laws?

  • Applicable for clients wishing to pass different assets to different family members.
  • Popular with clients with family business who have active and inactive family members
  • May also be used in combination with forced inheritance mitigation planning

U.S. Beneficiary Planning: How will the U.S. residency status of the deceased’s children affect the taxation of their worldwide assets / income? How will the US children’s status affect the amount of assets transferred to the deceased grandchildren? What steps could be taken to mitigate these burdens / liabilities?

  • Applicable for clients interested in minimizing potential inheritance tax exposure in the U.S •
  • Popular with clients with family members in the U.S.
  • Prevents unexpected tax consequences for family members living in the U.S.

Investment Diversification / Management: How comfortable are the mother and children with most of their wealth being linked to the family business? Do they wish to diversify their investment portfolio? Would any of the family members be interested in strategies to invest in a more tax-efficient manner?

  • Applicable for clients seeking to diversify and/or protect wealth •
  • May integrate conservative investments into portfolio
  • May be used by clients seeking to replenish lost wealth in recent market turmoil

Estate & Family Planning: Is it important for the patriarch to have a will? What estate and family planning is required by the principal and his wife? What special considerations exist? What is the status of the other family members’ wealth transfer plan?

Multi-Jurisdictional Tax Planning:

  • Applicable for clients wishing to pass different assets to different family members.
  • Popular with clients with family business who have active and inactive family members
  • May also be used in combination with forced inheritance mitigation planning

Charitable Giving:

  • Applicable for clients with charitable giving inclinations
  • Provides that charitable donation goals are met in efficient manner
  • May provide increased recognition for gifts and/or maximize charitable contributions