One of my favorite storylines on the television show Modern Family involves the drama (and humor) surrounding the family business, Pritchett’s Closets and Blinds. In the beginning, Jay Pritchett, the family patriarch, owns and runs the business, but ultimately passes it along to his daughter Claire when he retires. The shenanigans involving the business provide some lessons on family business management and succession. As far as we can tell, Jay never discusses his intentions with Claire, but rather tricks her into wanting to take over the business by pretending to offer the CEO position to a non-family member (not much planning went into that succession!) He says that he was testing her to see if she would fight for the position (is that really the best way to determine if she’s well-suited for the job?) Once she does become CEO, he often meddles in her decisions, creating chaos.
These storylines are designed to illicit laughs, but running a family business and planning for its succession need to be taken seriously if the business is to survive through multiple generations or even be sold successfully to an outsider. Our Family Business Committee Report covers some of these issues. In “Avoiding the Fire Sale of the Family Business at Death,” p. 48, David T. Leibell explains how to borrow money to pay the estate taxes owed if the family business owner dies and hasn’t done the necessary estate planning. “Governance for Business-Owning Families: Part II,” p. 43, by Patricia M. Angus, takes us through the complications that may ensue when there’s discord among family members and provides a framework and process for dealing with these issues. Finally, in “How Tax Reform Affects Family Business Owners,” p. 52, Paulina Mejia and Bryan Kirk explain how the Tax Cut and Jobs Act has added several new and complicated tax wrinkles to the discussions advisors should be having with their business owner clients.
Our issue this month also includes our Art, Auctions & Antiques special report, which covers information about the art world geared to estate-planning practitioners.