Business Wealth Transfer

Business Risk Management

In the rush of day-to-day business activities, many small business owners may lose sight of what they had originally hoped to accomplish. As your company grows and develops, it’s important to keep your priorities on track so your business activities are consistent with your long-term personal goals and objectives. Drawing upon our decades of experience working with business owners, The Wealth Transfer Group can help you, in a wide variety of ways, prepare for and plan for business and personal financial success.

Strengthening Personal Finances and Building Wealth

Many business owners become so engrossed in running their companies, they inadvertently put their personal finances on the back burner. This may occur if most of their liquid assets are tied up in the business. However, to achieve financial independence and build personal wealth, it’s important to make personal savings a priority. By working with our team to prepare regular financial reviews, and taking follow-up action as needed, you can help develop and strengthen your personal financial position.

Protecting Your Business against Loss of Key Employees

All business success is dependent on its men and women whose knowledge, leadership, judgment, or connections are what make things happen profitably. The death of a key person can result in serious consequences for the business. When insuring a loss through death, Key Person Life Insurance can provide an important source of revenue replacement. Further, the insurance can be designed to accumulate reserves that may be used ultimately for retirement, a termination replacement, or the retraining of successors.

Protecting a Business Partnership

If a business partner dies, a Buy-Sell Agreement protects the business and remaining owners from inactive, uninformed, and potentially dissident shareholders and helps consolidate control in the hands of the agreed upon group. Additionally, it helps fix the value of each owner’s business interest. From the viewpoint of the heirs of a deceased business owner, a buy-sell severs their dependency on the surviving owners and the economic fortunes of a business that has lost a key person.

Preparing for Retirement

Many tax-deferred, qualified retirement savings vehicles such as Simplified Employee Pension Plans(SEPs) or 401(k) plans are available to business owners and their employees. The size of a company, as well as the ages and salaries of its employees, often determines which type of retirement plan is best in a given situation. In addition, non-qualified plans allow business owners to provide selective benefits for themselves, as well as their key employees.

Developing an Exit Strategy

Will your small business be marketable if and when you decide to sell? It’s important to develop an “exit” strategy that can help provide cash commensurate with the value of your business in the event you choose—or are forced (due to death or disability)—to divest.

Retaining the Company within Your Family

If your company is operated by more than one family member, you may wish to keep the business in your family. In this situation, it’s important to learn about transfer tax issues and develop a business succession plan that will help secure your long-term goals and objectives.

Case Study

SITUATION: During a meeting with an existing estate planning client, he advised us that he had a 50% interest in a private equity firm with a business partner. The firm was in the process of acquiring insurance on the two partners for a buy-sell agreement and to satisfy bankers. We inquired about designing, quoting, and underwriting the coverage. Our client indicated it was probably too late to bring us into the process, but if we could put together a package within 48 hours that was financially superior, he would take it to his partner.

APPROACH: Our detailed design of the insurance was a specialized, guaranteed, first-year, high cash value product that did not impact book income or value. It was also from a carrier with the highest quality of ratings. Our client’s business partner said it would be virtually impossible to get examinations in time because our estate planning client was going on a 10-day cruise out of a different state in just two days. Knowing this, we worked diligently to arrange an exam for our client at his hotel the same day he was to board the cruise ship.

RESULT: Upon our client’s return, we had secured preferred offers on both our client and his business partner. Due to our extensive efforts, we were awarded their business.

Case Study

SITUATION: One of our existing business clients had purchased policies on several of his company’s divisional vice-presidents to fund a non-qualified retirement plan. Insurance premiums were payable for 10 years. Afterwards, policy values could be withdrawn from the policy to fund retirement payments to the vice-presidents. The policies were owned by the company and the retirement benefit vested at the end of 10 years. If a vice-president voluntarily left the company before 10 years, he received no payments. If a vice-president died during the 10-year period, while still employed by the company, the policy would pay the surviving spouse a tax-free benefit. During a meeting with our client, we learned that one of the executives had resigned one year earlier, six years into the required 10-year vesting period, to go to work for a competitor. The company indicated they were having some cash flow problems and bankers were balking at a continuing relationship. The company wanted to know their options on the existing policy of the former employee.

APPROACH: We advised the owner of three options: keep the policy without paying premiums until cash flow improved, surrender the policy for cash surrender value, or see if the policy could be sold for more than the cash value on the open market. Our client wanted to explore life settling the policy. We asked if they had any contact with the former employee, and unfortunately, they had not. We recommended they have someone contact the company that the former employee was at to re-establish contact.

RESULT: Two weeks later, our client found out that the former employee was in the hospital with a terminal condition. Ultimately, the former employee died, and the company was able to collect the insurance benefit which allowed them to pay down debt and renew their relationship with their bankers.

Business Continuation

You have spent a lifetime building a successful business. As you look ahead at your retirement and the divestiture of your company, do you want the final years of your career to end in a slowdown or decline? Or would you prefer to exit on a high note – making thoughtful provisions for your clients, employees and family; retiring on your own terms; preserving the value of your business; and continuing your company’s legacy for generations to come?

Although the choice may be obvious, the solution can be elusive. What most business owners don’t realize is that handing over the baton to a new owner, a key employee, or family member is a process, rather than a single event. And the more time allotted for planning, the better the outcome will be, particularly with regard to minimizing the tax consequences of transferring business ownership.

A business succession plan can maximize your business’s value and secure your own financial future when the time comes to sell, transfer or wrap things up. When planned properly, your transition should be smooth both emotionally and financially, not just for you and your family, but your employees and your successor as well.

Professional Guidance for your Journey

As specialists in guiding business owners through the journey of succession planning, The Wealth Transfer Group serves as your financial advocate to assure that your experience is as simple and smooth as possible.

In addition to offering you solutions that range from estate and tax planning to business advisory and wealth management, as well as looking after all aspects of the sale of your business, The Wealth Transfer Group serves as your central facilitator to ensure that all necessary details are properly coordinated with your other advisors, including your accountant and attorney.

Helping You Achieve Your Goals on Many Levels

We know that your life and your life’s work are inextricably linked. So we take the time to gain an in-depth understanding of your personal, family and business goals, as well as the psychological factors and emotional hurdles that come into play. This way, we can help you find solutions and resolutions that accommodate all of your stakeholders’ needs.

A Professional Process

To effectively manage the complexities of succession planning, we follow a proven process designed to help you ultimately reach your destination by taking it one step at a time.

  1. Identify and review priorities
  2. Establish goals and objectives
  3. Identify a buyer or successor
  4. Develop the succession plan
  5. Integrate personal planning goals into the plan
  6. Establish transfer methods (e.g. retirement income streams, buy-sell agreement, deferred compensation, trusts, ESOP, Family Limited Partnerships, etc.)
  7. Implementation
  8. Review and monitor the plan

During each step of the process, we work closely with you to:

  • Create a dialogue and process for you to begin to address the issues of succession
  • Coordinate planning with your other advisors
  • Establish goals and timelines
  • Plan for your retirement and family’s cash flow needs
  • Plan for the tax-efficient allocation of assets if your choice is to sell the company
  • Select appropriate wealth transfer strategies to minimize transfer taxes
  • Implement and fund the plan
  • Communicate and update the plan periodically

Qualified Employee Retirement Plans

As professionals with many years of experience in corporate retirement plans, our role is to serve as your company’s advocate – helping you connect your goals with the resources you need to accomplish them.

We offer comprehensive services for a variety of defined contribution plans, including 401(k) Plans, Employee Stock Ownership Plans (ESOPs), Profit Sharing or Stock Bonus Plans, 403(b) Plans, and Simplified Employee Pension Plans (SEPs)

Our approach is based on a business model supported by three core pillars: Simplicity, Focus and Balance.

View Our Approach

1. Simplicity

We do the work for you

– Evaluate your current retirement plan, a process that includes identifying places where you may be paying hidden and unnecessary fees

– Vendor benchmarking

– Maximize tax benefits

– Protect you and your company’s fiduciaries from unnecessary litigation

– Write a Request for Proposal (RFP) and analyze proposals to make sure you obtain the best solution

– Monitor your plan investments

– Educate and motivate your employees to participate

2. Focus

Results, Not Procedures

– Think of us as one of your employees — one who just doesn’t happen to have an office on site.

– Our expertise is in helping you get the results you want, and helping you understand the complex rules and regulations.

– We sit on your side of the negotiating table to find the best retirement plan solution for your company.

– Once your plan is implemented, we monitor it regularly to make sure it continues to meet your company’s goals over time.

– That leaves you free to focus on what you do best: running your business

3. Balance

Minimize Costs, Maximize Value

– Like many business owners, you are likely concerned about plan costs.

– Often, we are able to uncover places where you are paying unnecessary expenses and use that money to reduce your plan’s future expenses and cover other plan fees.

– Our Retirement Plan Diagnostic is conducted at the outset of our relationship and then, on a regular basis, to determine if there are opportunities for cost savings or program enhancements. This allows us to identify strategies and elements that may have been overlooked or not kept current.

Executive Compensation Plans

In today’s competitive business environment, key executives are one of your company’s most valuable assets. Competition to recruit, retain and reward top performers has grown to the point that traditional compensation methods are not enough.

Top executives are seeking ways to cope with tax issues and retirement needs amid restrictive legislation that dramatically limits the amount of income that can be deferred or contributed to the company’s qualified retirement plan. These executives are seeking wealth-building opportunities.

For this reason, a growing number of companies are turning to nonqualified deferred compensation arrangements, split dollar plans, phantom stock plans, and golden handcuffs to augment their key executives’ retirement benefits packages and overcome many of the regulatory restrictions that apply to qualified retirement plans.

Professional Guidance

As professionals with many years of experience in executive compensation strategies, The Wealth Transfer Group’s role is to serve as your company’s advocate – helping you define your specifications and compare existing programs with your current goals, with recent developments and with the competition.

We help you orchestrate the plan; assemble the required specialists; coordinate arrangements with your legal, accounting and internal advisors; and guide every aspect of your plan’s development.

The intended end result is a custom-built solution structured around your unique requirements – whether it’s:

-Retaining key personnel;

-Restoring executive benefits lost to government limits on qualified retirement plans;

-Rewarding executives and aligning their behavior with the company’s long and short-term goals;

-Recruiting key executives to your company; or

-Retiring executives as part of a well-coordinated succession plan.

Comprehensive Services

The Wealth Transfer Group goes beyond the traditional scope of services in our commitment to ensure that your executive compensation strategies not only meet your company’s financial goals, but are competitive with other companies that may be seeking the same key performers. Our services include:

1. NEEDS ASSESSMENT– Our advisors work with you to identify your company’s specific executive compensation needs and any underlying issues that may also need to be addressed.

2. RETIREMENT PLAN DESIGN– A review of your existing executive plans for performance against goals can help you determine:

-If they provide proper incentive for management to achieve top performance.

-If they are aligned with current compensation plan goals.

-Whether they are performing to expectations and how that performance is being measured.

-If they have remained current with interest and investment rates over time.

3. COSTS SAVINGS RECOMMENDATIONS– Based on a review of your existing executive plans (compared to the industry’s most current data), we will determine if there are opportunities for cost savings or benefit enhancements by identifying strategies and elements that may have been overlooked or not kept current. Our subsequent recommendations can result in substantial enhancements to earnings or cash savings.

4. INTEGRATED PLAN DEVELOPMENT– Our approach to both new and existing plans focuses on three separate but linked elements:

-Non-qualified plan design

-Plan funding

-Plan administration

Can– As part of our planning services, The Wealth Transfer Group offers financial and estate planning services for your high-net-worth executives.

See How Our Disciplined Process Works

1. Plan Design

Our goal is to ensure that your plan design reflects your company’s goals as well as those of your valued executives…

  • For existing plans, we are available to conduct a comprehensive audit of your current program and/or funding arrangements.
  • For new plans, we work with you to integrate a new strategic design with existing plans – that have been validated, revised, and enhanced.

2. Plan Funding

Matching Funding Strategies to your Plan Objectives

As your advocate, we provide a thorough and objective evaluation of possible funding methods using conservative assumptions and a strategic (versus product-driven) approach.

Integrating Funding Decisions with Your Corporate Methodology

Each method is analyzed using several scenarios that you define. These are then presented under the same parameters you use to make other corporate financial decisions.

Implementing Funding Decisions and Selecting Providers

Following that decision, we work with your tax, legal and accounting advisors to put in place a funding program consistent with your stated objectives.

3. Plan Administration

A critical part of any nonqualified program is effective and on-going plan administration and management that:
  • Provides your executives with account statements and access to benefit values.
  • Provides the corporation with the data and plan reporting necessary to enhance management oversight.
  • Manages asset-liability tracking on an active, ongoing basis through expense projection and reconciliation.
The Wealth Transfer Group provides access to the appropriate combination of third-party plan administration services to accomplish all of these tasks for your organization. We then assist in monitoring the effectiveness of those relationships through technology and comprehensive Annual Reviews.