Private Client

Ultra-High Net Worth

Case Studies

Preserving Family Legacy Through Strategic Estate and Business Succession Planning

One of our clients is a Bay Area family that runs a packaged food business. Founded by a husband and wife team, what was originally a fairly small mom-and-pop business had grown into a substantial, complex multigenerational enterprise. The family also grew to include two children, which led to developing the simplest estate plan imaginable. The involvement of their two children complicated things. One child became a key part of the operation of the business. One did not. And as time went on, the role and importance of the involved child became more and more essential to the business.

Key issues needed to be addressed and were growing more urgent every day—natural byproducts of the company’s growth and success, and the family’s lack of sophisticated planning. For example, the involved child was feeling a lack of respect and voiced a desire to branch off and start his own company. Behind this wedge issue was an array of other subjects that the family had not yet dealt with or planned for, nor trusted in sophisticated service providers to guide the aging parents. There was minimal estate and no tax planning for the family or succession planning for the business. The corporation lacked current governing instruments and maintained an Excel-based cost accounting system. Transfer rights and rights of first refusal were unclear, with only a basic, decade-old estate plan in place that was nowhere near sufficient to address the complexity created by the success of the company.

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Family-Owned Real Estate Portfolio Transitions Into Company

Problem: Over several decades, a Bay Area family amassed a real estate portfolio of multi-family residential units, commercial and light industrial properties. This wasn’t the result of any constructed plan, but just the product of a hardworking, successful, entrepreneurial Bay Area family over the years.

Thanks to appreciation in the real estate market, these holdings are now valued at $75 million. The family matriarch had always managed daily operations with the help of just a bookkeeper. Succession planning is now required, but the family is unprepared due to internal family dynamics, and a lack of strategic planning or a legal structure for a business of this size and complexity.

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Family Business Structural Change to Focus on Succession Planning

Problem: A long time Napa couple set out to create sought after, cult quality wines. In the decades that followed, the couple had two children, founded a highly successful winery, and increased their land holdings. Their adult child and a non-family member later joined the company and took on the role of winemakers. Shortly after the matriarch died, the patriarch began to plan for his own death, which included structuring his business for success, maintaining his legacy, and minimizing conflict among his children (one in the wine business and one with no involvement in the business) and non-familial business partners.

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Company Founder Future Planning

Problem: Thanks to some very innovative technology, perfect timing and a great deal of very hard work, a relatively young tech entrepreneur was preparing for an exit (i.e., liquidity event) in the next year or two from the company he had helped build. In a previous company, also successful, a lack of tax planning resulted in missed opportunities – he did not want to make the same mistake twice.

So, what to consider this time around?

While a great exit is the dream of everyone who launches a tech startup, it also suddenly presents individuals with a myriad of complex, high-stakes and above all, new and pressing legal and tax questions and issues. Following a referral from an investment banker, the founder retained Farella Braun + Martel to help him manage the legal and tax planning aspects of the anticipated dramatic increase in his net worth.

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Vacation Home or Passive Income?

Problem: After decades of use and enjoyment, the high net worth family of an entrepreneur who had done very well in manufacturing, and then e-commerce, decided it was time to part ways with a beloved vacation property in Sonoma, California. The three children who had used it were now starting careers of their own and scattered across the country. The property had appreciated considerably in twenty years and the entrepreneur and her husband were faced with the challenge of realizing the benefit of that appreciation without paying a huge tax bill and, ideally, transferring some of that value to their children.

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