securities offered through linsco/private ledger (lpl), member finra/sipc financial planning...

Securities offered through Linsco/Private Ledger (LPL), Member FINRA/SIPCFinancial Planning services through Hall Riback Childress & Gore LLC, A Registered Investment Advisor

Steve Steve HopkinsHopkins

Doug SippelDoug Sippel

•What is an asset?What is an asset?•What is the most important asset you What is the most important asset you

possess?possess?•True Wealth is made up of:True Wealth is made up of:

•Financial CapitalFinancial Capital•Human CapitalHuman Capital•Intellectual CapitalIntellectual Capital

What is True Wealth?What is True Wealth?

What is True Wealth?What is True Wealth?

• Social CapitalSocial Capital

Divide – Defer – Divide – Defer – DumpDump!!

What does “Keep it in the Family” What does “Keep it in the Family” mean?mean?

• What is your definition of “Family”?What is your definition of “Family”?– Blood RelativesBlood Relatives– SpousesSpouses– ChildrenChildren– Step-ChildrenStep-Children

What is the Problem?What is the Problem?

• Not enough income to support your Not enough income to support your retirement & the next generationretirement & the next generation

• Elder Care Costs Elder Care Costs • AppreciationAppreciation


• Property taken out of ProductionProperty taken out of Production• Losing the ranch?Losing the ranch?

– TaxesTaxes– Death, Divorce or second marriageDeath, Divorce or second marriage– LawsuitLawsuit– Poor managementPoor management

• Losing the Legacy?Losing the Legacy?• Breakup of the family?Breakup of the family?• Family stops talking to each other?Family stops talking to each other?


• Shirtsleeves-to-Shirtsleeves in Shirtsleeves-to-Shirtsleeves in three generations three generations – 70% failure rate of wealth transitions*70% failure rate of wealth transitions*– Involuntary removal of assets from the Involuntary removal of assets from the

beneficiaries controlbeneficiaries control

• Why?Why?

*Source: The Williams Group

WorksheetWorksheet

• Take a minute to write your definition Take a minute to write your definition of:of:– The ProblemThe Problem– Your Goals and ObjectivesYour Goals and Objectives– Your ValuesYour Values– Family to include in planning processFamily to include in planning process

What is the cause?What is the cause?

• Misunderstanding the causeMisunderstanding the cause– hint: It’s not the taxes!hint: It’s not the taxes!

• Professionals asking the wrong questionsProfessionals asking the wrong questions– Divide – Defer – Dump - Dissipate Divide – Defer – Dump - Dissipate – Who should get the wealth? Who should get the wealth? – When should they get the wealthWhen should they get the wealth– How much wealth should they get?How much wealth should they get?

*Source: The Williams Group


• Communications breakdown and lack of Communications breakdown and lack of trust trust – 60%*?– 60%*?

• Poor Communications – Heirs don’t Poor Communications – Heirs don’t understand the intentions of their parentsunderstand the intentions of their parents– No shared goalsNo shared goals– No shared processNo shared process– No shared experience or actionsNo shared experience or actions

*Source: “Preparing Heirs” Roy Williams and Vic Preisser

The 8The 8thth Habit -- Habit -- Stephen CoveyStephen Covey

• Only 37% said they have a clear understanding of Only 37% said they have a clear understanding of what their organization is trying to achieve and what their organization is trying to achieve and whywhy

• Only one in five was enthusiastic about their Only one in five was enthusiastic about their team’s and their organization's goalsteam’s and their organization's goals

• Only one in five said they had a clear “line of Only one in five said they had a clear “line of sight” between their tasks and their team’s and sight” between their tasks and their team’s and organization’s goalsorganization’s goals

• Only 15% felt that their organization fully enables Only 15% felt that their organization fully enables them to execute key goalsthem to execute key goals

• Only 20% fully trusted the organization they work Only 20% fully trusted the organization they work for.for.

Mackenzie and EmilyMackenzie and Emily


• Lack of trust – What messages are Lack of trust – What messages are you sending*?you sending*?– Reliability – Do you keep promises?Reliability – Do you keep promises?– Sincerity – Do you have a false front?Sincerity – Do you have a false front?– Competence – “Beginners Mind”Competence – “Beginners Mind”

*Source: Building Trust, Robert Solomon & Dr. Fernando Flores


• Un-prepared Heirs – 25%Un-prepared Heirs – 25%– More time spent preparing More time spent preparing

documents than preparing heirs for documents than preparing heirs for the impact of those documentsthe impact of those documents

– No mentoring or training to share No mentoring or training to share knowledge and wisdomknowledge and wisdom

– No skill/talent/interest assessmentNo skill/talent/interest assessment– No experienceNo experience


• All other causes – 15%All other causes – 15%– Failure of Professionals – 3%Failure of Professionals – 3%

• Financial, Tax, and Legal adviceFinancial, Tax, and Legal advice

– Lack of a Wealth Philosophy and Lack of a Wealth Philosophy and Mission StatementMission Statement

How is the communication in your How is the communication in your family?family?

• Do you have family meetings?Do you have family meetings?• Have you developed “Rules for Talking”Have you developed “Rules for Talking”• Do you encourage individuals to “Live Do you encourage individuals to “Live

their Passion”their Passion”• Conflicts you can’t resolve?Conflicts you can’t resolve?

– Don’t be afraid to bring in a professional to Don’t be afraid to bring in a professional to mediate mediate

Why don’t you start?Why don’t you start?

• ConfusionConfusion– What do I do and How ?What do I do and How ?

• Fear of:Fear of:– disrupting family dynamicsdisrupting family dynamics– Cost of professionalsCost of professionals– making a mistakemaking a mistake

• ProcrastinationProcrastination• The tyranny of the urgentThe tyranny of the urgent

Ownership

Business

Family

Why is this so hard?Why is this so hard?

Succession Planning Happens

Here

• Give the business to one or more children Give the business to one or more children nownow

• Leave it to one or more children after you dieLeave it to one or more children after you die• Sell the business to one or more of your Sell the business to one or more of your

children nowchildren now• Sell the business to one or more key Sell the business to one or more key

employees or partnersemployees or partners• Sell the business to an outside 3Sell the business to an outside 3rdrd Party Party

Common Exit Paths for Family Common Exit Paths for Family BusinessBusiness

• Leave the business to someone you Leave the business to someone you know and trustknow and trust

• Ability to retain control and remain Ability to retain control and remain involved involved

• Continue the legacyContinue the legacy• Perpetuate the family banking and Perpetuate the family banking and

business modelbusiness model

Advantages of transferring to familyAdvantages of transferring to family

• Financial Risk Financial Risk • Conflicts over Cash FlowConflicts over Cash Flow• Business/Management/Family member Business/Management/Family member

conflictsconflicts• How to treat family members fairly and How to treat family members fairly and

equallyequally

Disadvantages of transferring to Disadvantages of transferring to familyfamily

• What is the right amount of wealth to What is the right amount of wealth to leave each child?leave each child?

• Look at each child as an individualLook at each child as an individual• What are their unique abilities and talents?What are their unique abilities and talents?• How much is enough?How much is enough?

– Your children should “Earn their own”Your children should “Earn their own”– Consider a “fund” approachConsider a “fund” approach

• When should you transfer?When should you transfer?

Fair vs. EqualFair vs. Equal

• Use Life Insurance to help equalizeUse Life Insurance to help equalize• Diversify assets to make it easier to Diversify assets to make it easier to

dividedivide• Separate ownership – lease to siblingsSeparate ownership – lease to siblings

– LandLand– CattleCattle– EquipmentEquipment

Fair vs. EqualFair vs. Equal

True Wealth Succession Planning True Wealth Succession Planning involves Estate Planninginvolves Estate Planning

By DefaultBy Default

CharityCharity

GovernmentGovernment

HeirsHeirs

0%

34%

66%

By DesignBy Design

CharityCharity

GovernmentGovernment

HeirsHeirs

?%

?%

?%

ChoicesChoices

$10 million $10 million estateestate

• Do we have enough income to support Do we have enough income to support multiple families?multiple families?

• Have we created another source of Have we created another source of retirement income besides the ranch?retirement income besides the ranch?

• What happens if one or both of us need What happens if one or both of us need to go into a nursing home? Do we need to go into a nursing home? Do we need Long Term Care Insurance?Long Term Care Insurance?

Financial Realities: Important Financial Realities: Important questions to askquestions to ask

Family Wealth Philosophy Family Wealth Philosophy

• What is the Purpose of our Wealth?What is the Purpose of our Wealth?– Provide a Lifestyle, a home, a job?Provide a Lifestyle, a home, a job?– Provide level of comfort to family Provide level of comfort to family

members?members?– Provide educational and occupational Provide educational and occupational

opportunities?opportunities?– Grow for future generations?Grow for future generations?– Philanthropy?Philanthropy?

• It’s 10:30 in the morning, the day after It’s 10:30 in the morning, the day after your birthday 5 years from now…your birthday 5 years from now…

• What are you doing?What are you doing?• Where are you living?Where are you living?• What are your children doing?What are your children doing?• Where are they living?Where are they living?• Are you still involved with the business?Are you still involved with the business?

Important questions to askImportant questions to ask

• What’s important to you about passing What’s important to you about passing the ranch to your children? the ranch to your children?

• What’s important about it to them?What’s important about it to them?• What is the net worth of the assets on What is the net worth of the assets on

the Human Balance Sheet? the Human Balance Sheet? • How do I want to be remembered?How do I want to be remembered?• How will I be remembered? How will I be remembered?

Important questions to askImportant questions to ask

What are the solution(s)?What are the solution(s)?

• Have a ProcessHave a Process– Step 1: Determine your Goals & ObjectivesStep 1: Determine your Goals & Objectives– Step 2: Do a thorough financial analysisStep 2: Do a thorough financial analysis– Step 3: Develop Preliminary plan with your Step 3: Develop Preliminary plan with your

Advisor(s)Advisor(s)– Step 4: Schedule a family meeting to share your Step 4: Schedule a family meeting to share your

Goals & Objectives and seek input from family Goals & Objectives and seek input from family membersmembers

– Step 5: Finalize the plan based on family inputStep 5: Finalize the plan based on family input– Step 6: Implement the planStep 6: Implement the plan– Step 7: Continue family meetings as neededStep 7: Continue family meetings as needed


• Family communication systemFamily communication system– Include the Include the entireentire family – Spouses and family – Spouses and

minor children alsominor children also– Parents don’t give up control – seek inputParents don’t give up control – seek input– Shared process - Shared definitions of Shared process - Shared definitions of

successsuccess– Communication skills training for building Communication skills training for building

trusttrust– Consensus leads to clarity of purposeConsensus leads to clarity of purpose

ResourcesResources


• 5 Primary Estate Planning Strategies5 Primary Estate Planning Strategies– Maximize Valuation DiscountsMaximize Valuation Discounts– Credit Shelter Trust – Preserve the creditsCredit Shelter Trust – Preserve the credits– Gifting – Lifetime transfers are less Gifting – Lifetime transfers are less

expensiveexpensive– Use Life Insurance LeverageUse Life Insurance Leverage– Give away the Estate Tax to CharityGive away the Estate Tax to Charity

• Grow the wealth – reduce the taxGrow the wealth – reduce the tax– Family Asset AllocationFamily Asset Allocation


• Other Important ToolsOther Important Tools– Pre-nuptial Agreements Pre-nuptial Agreements – Diversify the Balance Sheet Diversify the Balance Sheet – Cash Flow AnalysisCash Flow Analysis– Create a Balance sheet of Human and Create a Balance sheet of Human and

Intellectual CapitalIntellectual Capital


• Family MeetingsFamily Meetings– Use to communicate with all family Use to communicate with all family

membersmembers– Hold at least annuallyHold at least annually– Use a Facilitator Use a Facilitator – Use to educate all family membersUse to educate all family members

• Financial PlanningFinancial Planning• Estate PlanningEstate Planning• Charitable PlanningCharitable Planning

• Creates peace of mind Creates peace of mind • Eliminates conflicts and emotional decision Eliminates conflicts and emotional decision

making making • Decisions based on financial realityDecisions based on financial reality

Why is it important to have a written Why is it important to have a written plan?plan?

• Eliminates or reduces the risk of :Eliminates or reduces the risk of :– Asset concentrationAsset concentration– Liquidity events – 5Ds, 1 B & 1 RLiquidity events – 5Ds, 1 B & 1 R

• DeathDeath• DisabilityDisability• DiseaseDisease• DivorceDivorce• Demand for DividendsDemand for Dividends• BankruptcyBankruptcy• RetirementRetirement


• Increases the value of the business Increases the value of the business and confidence of:and confidence of:– Lenders Lenders – InvestorsInvestors– CustomersCustomers– VendorsVendors– Family membersFamily members


• Greater family wealth transfer to future Greater family wealth transfer to future generationsgenerations

• Reduces capital gains and estate taxesReduces capital gains and estate taxes• Creates a proper valuation for the businessCreates a proper valuation for the business


Why do you need a Why do you need a teamteam of specialists? of specialists?

• This is a unique, and complex set of This is a unique, and complex set of issuesissues

• Most advisors don’t deal with these Most advisors don’t deal with these issues on a regular basisissues on a regular basis• They don’t have a shared processThey don’t have a shared process• Don’t operate as a teamDon’t operate as a team

• Good communication is criticalGood communication is critical

OrganizationOrganization

Personal Financial Plan

Wealth Preservation

Planning

Insurance Needs

Business Continuity

Owner’s Exit Objectives

Business Valuation

EXIT PLAN

ConclusionConclusion

•What is most important? What is most important? •What is financially feasible?What is financially feasible?•Does your family understand the tune Does your family understand the tune

you’re tapping?you’re tapping?•Do you want the default plan?Do you want the default plan?•Do you have a team? Do you have a team?

Action StepsAction Steps

•Commit to start Commit to start TodayToday! ! •Write downWrite down what’s important what’s important•Work with a team of succession planning Work with a team of succession planning

specialistsspecialists•Attend another workshopAttend another workshop•Schedule a Family MeetingSchedule a Family Meeting•Action Step…24 HoursAction Step…24 Hours

securities offered through linsco/private ledger (lpl), member finra/sipc financial planning...

Documents

background slide

planning process slide

williams group slide

definition of family

vic preisser slide

true wealth

family stops

values family