Case Study 9

Transitioning to the Next Generation

Over the course of four decades, Sam built a highly profitable manufacturing firm. Shortly before his 70th birthday, he decided to retire and begin to hand over the business to the next generation.

The older of Sam’s two sons, who played a key role in the business since graduating from college, seemed the most likely to succeed his father as the President and Chief Executive Officer. Sam’s younger son, a successful dentist, had not been actively involved in the business. Still, Sam wanted a wealth transfer strategy that would give both sons their fair share.

With this in mind, Sam turned to SunTrust Private Wealth Management for help with wealth transfer planning. A multidisciplinary team worked closely with Sam’s attorney. The team developed a combination of business structures, consulting arrangements and minority interest gifts to ensure that both sons and their families would share equitably in the inheritance.

The SunTrust advisor team also worked with Sam and his attorney to create and administer an irrevocable life insurance trust. This trust should provide sufficient funds for any estate taxes without having to liquidate the business upon Sam’s death. With all the pieces in place, Sam feels confident about the continuity of his business—and the well-being of his family.

Disclaimers

SunTrust Bank and its affiliates and the directors, officers, employees and agents of SunTrust Bank and its affiliates (collectively, “SunTrust”) are not permitted to give legal or tax advice. While SunTrust can assist clients in the areas of estate and financial planning, only an attorney can draft legal documents, provide legal services and give legal advice. Clients of SunTrust should consult with their legal and tax advisors prior to entering into any financial transaction or estate plan. Because it cannot provide legal services or give legal advice, SunTrust’s services or advice relating to “estate planning” or “wealth transfer planning” are limited to (i) financial planning, multigenerational wealth planning, investment strategy, (ii) management of trust assets, investment management and trust administration, and (iii) working with the client’s legal and tax advisors in the implementation of an estate plan.

These materials are educational in nature. The implications and risks of a transaction may be different from individual to individual based upon past estate, gift and income tax strategies employed and each individual’s unique financial and familial circumstances and risk tolerances.

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