Charitable commitment planning and increasing heirs’ stake
Our client was the senior shareholder of a family owned S Corporation. He wanted help in planning for large charitable commitments while simultaneously focusing on succession issues with his children, who ran the family business. He wanted to find a tax effective way to dilute his ownership interest in the business while increasing his children’s ownership percentage; but he also wanted to create the liquidity needed to manage his charitable commitments.
Tax solutions that work for you
We looked at the problem from every conceivable angle and determined that a partial tax free liquidation of the S Corporation stock would provide a tax outcome that yielded more cash to the senior shareholder — and fund his charitable commitments. Our approach allowed him to make his contributions to charity in cash, reducing the senior shareholder’s stock holdings while increasing his children’s stock ownership percentage.
Making family involvement in philanthropy a success
Members of a family business — senior and the next generation alike — had individual interests in philanthropy. However, while their involvement in philanthropic activities mirrored the family business’ values, it was only to a limited extent and there were no common giving principles at work.
The importance of giving back
Recognizing the importance of “giving back”, and the ways in which such activities truly strengthened the bonds between family members, the family council decided to create a more structured approach to the family’s philanthropic efforts.
We helped the family council come to agreement on a common set of philanthropic goals and singled out which types of investments would best serve the needs of their charitable work. We also analyzed the members’ existing philanthropic projects and integrated them into the new overall framework.
Making the investments work effectively
Finally, we offered advice on which structures we thought would ensure that their philanthropic investments would be controlled effectively and helped create a simple mechanism to regularly evaluate their investments.