The Firm has decades of experience helping clients design and implement an effective family business ownership structure. As a family’s assets and businesses grow, the nature of its ownership structure becomes more complex. The objective of business organization planning is to create a structure that is simple but provides powerful business, tax, and estate planning benefits. The major benefit of entity planning is that it can provide the ability to maintain family control of assets and protect against dissipation. Family assets are typically dissipated through taxes, excessive spending, and attacks by creditors. The objectives of an estate and business ownership structure are to:

  • Maintain ownership and control of assets in the hands of desired family members
  • Create a family investment plan
  • Minimize and avoid estate and gift tax
  • Minimize income taxes
  • Minimize loss of assets to risk arising from business operations
  • Protect assets
  • Facilitate family budgeting (a.k.a. protect assets from family / excessive spending)
  • Pool assets to meet investment manager minimums and minimize management fees
  • Pool assets to allocate among asset classes
  • Allow transfer of membership interests in entities that own family assets rather than the assets themselves.
  • Irrevocable Trusts
  • Limited Liability Companies (LLCs)
  • S Corporations
  • C Corporations

The backbone of a family ownership structure is the use of trust and business entities. A typical advanced planning family structure will include most if not all of the following entities:

Of these entities, irrevocable trusts and limited liability companies are the most effective to protect assets and minimize taxes. Assets owned by an irrevocable trust are generally not included in a beneficiary’s estate and are effective to keep assets within the family. Assets owned by a limited liability company are also effective to control and protect assets.