Trusts & Estates

Case Study: Estate Planning Techniques Protect a Business for the Family

Opportunity A 75 year old couple owns a technology company. Their net worth is approximately $14,000,000, more than half of which consists of the business. They have a 30 year old daughter who works full-time in the business and is getting remarried, and a 28 year old son who is a doctor and not involved in the business and has creditor concerns. They wanted to protect their children's inheritance and the daughter's role in the company.

Action: We recommended that the client meet with their financial advisor and life insurance professional to discuss purchasing a survivorship life insurance policy in order to have funds to pay the estate tax without forcing the company to borrow money to pay the estate tax. The estate plan we designed included the preparation of "credit shelter" Wills in order to maximize the use of state estate exemptions. The Wills also included "generation-skipping" trusts for the children which held their inheritances in trust for their lifetimes in order to protect the inheritance from divorce and insulate it from malpractice creditors. Finally, we incorporated a buy/sell provision in the Wills in which the business was allocated to the daughter's share and she is given an option to buy out her brother's shares, and, if that is not done, the son has the right to force his sister to buy his shares.

Result: Our lawyers accomplished the clients’ goals of avoiding a mortgage on the business’ future, ensuring that the inheritance is protected and continuing control of the business by the active daughter.