Case Study: Family Succession Planning

Background

Over 100 years ago, a local rancher began acquiring additional real estate for purposes of grazing cattle in the winter months. From this rather humble beginning, the roots of wealth began to grow as oil and gas were discovered under his grazing lands. Over the generations, the family invested in a number of private and public entities and the wealth grew exponentially. Ultimately the younger family members realized the need for a plan.

Goals

In the early 1980s, the family recognized that they needed assistance due to the impending death of the patriarch and sought out Kanaly Trust. Through our in-depth discussions with the family, we helped them clarify the following goals:

  • Provide protection of assets passing to future generations
  • Reduce complexity in the management of their various properties
  • Satisfy charitable intent focusing on education
  • Maximize value of assets in transference to future generations

Result

Over a period of about ten years, we assisted in the creation of various entities to satisfy the family goals. Through our forward-looking planning and implementation, we recognized the possibility of important opportunities that could likely be eliminated as a result of impending legislative changes. As such, we recommended actions which significantly reduced estate and gift taxation as assets were received by future generations. Some of our work included analysis of various assets to identify which ones would have the highest potential appreciation for funding to multi-generational trusts. We also recommended and assisted with the implementation and ongoing management of various charitable gift strategies. Finally, we suggested that the vast remaining family wealth be managed efficiently through a family limited partnership.

At our suggestion, the family consented to a regular meeting schedule to discuss family business. In addition to business discussions, we also reflect on the family history, monitor changes in family situations, and provide guidance and counsel on an individual basis to each family member. Over the years, some of the individual counseling included: negotiating construction contracts, negotiating oil and gas leases, taking a lead role in working with outside professionals (accounting, valuation, legal and insurance), and facilitating discussions on important family issues including educating the third and fourth generations on financial matters.

Profile

Occupation: Family of Entrepreneurs

Net Worth: $50 million