So You Want to Become the Kennedy’s
Currently in the United States we have a dismal record of losing 65% of the family wealth in the second generation and 85% in the third generation. Our country cannot afford these losses. Why is it that some families maintain their health, wealth, and property from one generation to another? Their children are not spoiled but are industrious? The parents and grandparents are respected? Why does the family grow in number and power and continue to contribute generation after generation to business and government?
These questions have intrigued us. As an attorney who specializes in business, estate, tax, and financial planning for over 27 years, I have “tutored” one large family after another and observed their pluses and shortcomings. From my observations, I have seen patterns and correlations emerging.
1. Dynasty Families Operate a Business Within the Family. For long-range survival, Dynasty Families operate a family business that produces income and provides jobs for family members. The family business is the boat in which the family sails through the winds and waves of economic changes. The Dynasty Family is its own boss!
2. Dynasty Families Own Their Own Business Property and Residential Property. The property occupied by the family business should be owned by the family inside of Family Limited Partnerships and Family Limited Liability Companies to avoid paying rent to outsiders and being subject to an outside landlord. Further, such ownership allows the family to enjoy the rental income and the appreciation of the property. The Dynasty Family is its own landlord!
3. Dynasty Families Develop Their Own Cache of Safe Liquid Funds. The survival-oriented Dynasty Family establishes and maintains (a) safe Irrevocable Trusts for children, grandchildren, and great-grandchildren; and (b) Family Limited Partnerships and Family Limited Liability Companies. These entities generate liquid funds in low income tax brackets. These funds are available to lend to the family business and to the family members in need. The family business, therefore, does not have to depend on banks and financial institutions. Instead, the family business borrows from the Family Banks. The Dynasty Family is its own best bank!
4. Dynasty Families Have a Family Leader and a System of Succession. Successful families that are prepared for survival all seem to have a leader (matriarch or patriarch) who make the ultimate decisions for the family. Trusts are great mechanisms for passing wealth smoothly and without probate ensuring that the estate will continue. The king is dead. Long live the new king!
-Guest blog written by The Forakis Law Firm, PLC
PS – This month we are looking for one of Estate Planning Attorneys Power Partners: Bookkeepers to join LeTip as our category of the month. Know any Bookkeepers? Send them to a local chapter to visit and possibly join!