Got Family

Hello. This is got family and I am Carey Berger and today we’re talking about charitable giving. First, why? Hopefully because you have a cause you believe in beyond that there are tax advantages. Cash is of course simple and immediate. Appreciated assets allows you potentially to have that tax at the charities tax rate which is zero. Structured gifts allows you to receive something back, potentially in the form of income for your lifetime. The question is through whom? You give it directly to the charity, you can give it through a committee foundation or you can create your own private foundation. Let’s start with the easy one that is wrong and that is a private foundation. It's too much work and it's not worth it, generally speaking. The community foundation can achieve the same thing. The community foundation gives you the ability to divide amongst different charities of your choosing and that may vary over time. The short answer is follow your heart and do it wisely. Utilize the tax codes so that you can potentially give more either to your charity or to your family. To hear more stories from the crossroads of business and family search got family in iTunes or visit gotfamilyradio.com.

Carey talks about leaving everything to your spouse when you pass.

Carey asks the question, "Can I retire and still be me?"

Carey talks about wills

Carey talks about how to find the worth of your business using EBITDA

Hello this is got family and I am Carey Berger. Today we are reminding you that you are not superman, you are indeed a human being. And even though you are the owner of this business and the head of this household and this family. The biggest challenge that we as business owners face many times in our personal life and our family life is the expectation that we can do anything. Thus, anything that we don’t do we must have chosen not to do it. So, that’s a lot of responsibility. My gift for you today is to let you know you are not superman.

Hello this is Got Family and I am Carey Berger. This is the show where we tell stories from the crossroads of business and family. Today we are talking a little bit about what happens when I’ve got one business and many children. Do we indeed try to divide this? Can it support it? And I guess the easiest answer is this; ask yourself can this business afford to provide ownership income without participation in the work? If so, then you may be able to split your business amongst multiple people. If not, then you are going to need to consider alternative inheritance which could be in the form of insurance, could be in the form of other assets or it could be that you allow the one who is getting the business to buy it. Those payments then go into the estate for division amongst your family. This is Got Family and we’re telling the stories from the crossroads of business and family.

Hello this is Got Family and I am Carey Berger and today we are talking about the family bank. You’ve seen the t-shirts, “The Bank of Dad.” Well, to some extent that is one of the great gifts you do give to your children; and that you as an entrepreneur may be able to give in a more dramatic way. By providing money, much like an angel investor, you can be that seed money and that support to allow your children to create their own business and their own wealth. In many ways, the transferring of the business didn’t happen in the form of your specific business but in the form of support that enabled them to build their own. This is Got Family where we tell the stories at the crossroads of business and family.

Welcome to Got Family. I am Carey Berger and today we’re going to talk about sharing. Yes, that's right. You learned it when you were three and you didn't like it then and whether or not you like it now is a whole other discussion, depending upon the circumstance I'm sure. But nonetheless, let's talk about sharing.

Carey talks about the decisions you have to make with your Board of Directors and Executive Team.

Carey talks about the difference between different types of loans

Carey talks about selling your business to someone within your family.

Carey talks about what a board of directors is, how it compares to a board of advisers, why you might want one, and how you should compensate them.

Carey talks about the good, bad, and ugly behind "control"

Carey talks about why partnerships fail- pt. 2

Hello, this is Got Family and I am Carey Berger and today we're going to talk about one of the reasons why partnerships fail, what is missing in the business plan. You know the business plan actually has three primary parts and most people only think of two. The first one is the dream, the dream of what we’re going to build here, who we can serve, what's the need in the marketplace, why are we the right people for this, how is this going to work. All that exciting stuff, that's the part that most everybody wants to focus on, and they should, but unfortunately, it's only one third of the deal. Second piece is the numbers, and you’ve heard me talk about that many times. The numbers are, of course, where the rubber meets the road, so to speak. The key there is to bring those numbers as close to daily as possible. Realistically, if you get month by month your fine, but annual numbers are worthless. Finally, the piece it's missing is the ‘what do we expect to get out of this’ piece. That is the part there for the investors, that is the part there for the bankers, and that is a part there for you because even if you did not have partners you would still be the investor, and you should understand what your reason for doing this is, when you expect this to pay off and how do you expect this to pay off? That is a place where, when you have a partnership so often we wind up really having a failure to communicate, and what winds up happening is I expect that I'm going to invest and I'm going to be an owner and based upon that I'm going to receive my money in this way, at this time and it’s going to feel really good to me. You expect that you're going to invest and you’re going to be an owner, and you’re received in a different way. It's not that either one is right or wrong, in fact a friend of mine used to use this analogy; it's like if you're expecting a pony and you got a bicycle. A bicycle is still pretty good, but if you're expecting a pony, you're disappointed. And so that's what this really comes down to. So, much of the time partnerships will fail right from the beginning with a difference of expectations and it starts with the business plan. Include an indication of how you're going to invest, are you getting a return on that investment, and if it's going to happen, when? When is it going to happen? Is it going to happen from dividends, is it going to happen from when you sell the business, and how soon should that be, and what are the expectations there? That's one of the reasons why partnerships fail and we’ll give you a couple more another day here at Got Family.

Carey talks about liability protection

Carey talks about the differences between trusts and wills

Hello, this is Got Family, and I am Carey Berger and as the song would indicate, we are talking about monsters. No, we aren’t talking about monsters exactly, we’re talking about fear. As a family business owner most of us know what it is to have some degree of fear. How we deal with that fear is each of our own neuroses, oops I mean our own life, and that fear for a family business owner usually starts off with the financial. Like I said, it's personal, financial, and structural, and that’s how we look at every question around here at the Got Family show. From a financial point of view it's like, okay if I just work harder, if I put more money in the bank, I'll have the money to get through the tough times, I’ll save, save, save, and that'll be how I deal with my fear. Financial is good, but then there's the personal side. Okay, again, I'm not going to ever let Phil play the song ‘Cats in the Cradle’, but nonetheless, I'm afraid I've given up my life in exchange for this business. I'm afraid I've lost the opportunity to be the father, or the mother that I want to be. How do I deal with that fear, or that guilt? Then on the structural side there's all of that liability control. There's a reason why there's an LLC, or C Corp, or S Corp., or any number of other entities that you may or may not need to give you some degree of structural protection from liability, but how you operate that structure really matters. You can have all of the best Corporation drafted by the best attorney in the whole wide world, and at the same time you still have to operate it, you still have to know what you're doing within that. I will talk about that in another episode, but in the meantime, this about fear. Let's mash the monsters and address those small three points of view, whether it be the personal, the financial, and structural, it's a scary world out there, and for those of us who are running the businesses that we’ve built ourselves, we sometimes have a little more fear than others. We have to cover it up because that's how we get through the next, and that's how we keep don't were doing, and that's also the reason why, hopefully, there's some upside in our business, because that is the price we pay in exchange for taking ownership and responsibility over our lives in maybe a little different way than some people do. Everybody's got their own demons to slay, but sometimes the ideas apply to you that you can apply in whatever ways appropriate in your world. That’s what we do, we tell stories form the crossroads of business and family here at the Got Family show, and I am Carey Berger.

Carey talks about cash reserves for your business

Carey talks about the pros and cons of being the "superman" in your business

Carey talks about "doing it all" and the guilt that can come from it

This is Got Family and I am Carey Berger. As you know we tell stories from the crossroads of business and family. We tell each of these stories from one of three points of view, or hopefully all three if we have time. That is personal, financial and structural. We’re going to talk about the personal side of one piece of this and I’m going to call it the family board for lack of a better word.

Hello, this is Got Family and I am Carey Berger, and we are telling stories from the crossroads of business and family. As you probably know, we’ve talked in the past about boards. You've heard about a Board of Directors, or Board of advisors, and we’ve talked about a family board. What is a board, okay, and how you pay them? Why do you pay them?

Hello this is Got Family and I am Carey Berger and today we’re going to talk about alternatives to ownership when somebody wants to be your partner. What happens here is somebody comes in and they say, “I’ll loan you money and you make me a partner.” Okay, great. What does that mean? Well, sometimes what that means as we’ve talked about in other settings, is a whole bunch of baggage and potentially misunderstood relationships. How do we clarify those relationships? By calling them what they are. There are different levels of “ownership,” and let's talk about that. I bring in money and I want to be at no risk beyond that money and I want to get a steady amount of interest and I don't want to have to worry about drinking behind anyone else, I get to go first. I'm a banker, okay? So, I'm putting my money in and I get out first before anybody else. I'm not really at risk anybody else is behind me and I get interest rate that is banking. That's a loan. Second status, okay fine, I bring money in and I only want to lose that money. I don't want to risk my personal guarantee, but otherwise I want all those other things that are like an ownership. I want to be able to participate in the larger upside and I'm willing to go down to zero and never get repaid if I have to. I just don't want to risk me personal guarantee. That's a limited owner. You can call it a special class of shares, you can call it a number different things. But either way they are still different from the third class which is a true partner or true fellow shareholder or member of a limited liability company, those are all of the technical terms. But nonetheless, that third one, the true ownership as we think of it, that's the one where I am potentially risking everything. If things go wrong I have my name on the personal guarantee. If any one partner has their name on the personal guarantee then anybody else who wants to claim to be a partner should also be on that personal guarantee. If they are not they’re not at the same level as a person who is. That's the key distinction; recognize the level of involvement, recognize a level of commitment and from there you can recognize how you compensate them as well as how you manage the question of, “but I decided I want ownership.” Great! Here's what it means to be an owner. If you want to be owner here's the personal guarantee. “I don’t want that.” Great! Then that means you want a different type of ownership; here's the other offer, That's how you manage this conversation. And hopefully by managing the expectations and understanding the different relationships of what type of ownership a person is in, it will help you to build and preserve your business and your family, right here at the crossroads of business and family. This is Got Family and I am Carey Berger.

Hello, this is Got Family and I am Carey Berger and today we’re going to talk about entity choice, and we’re going to talk about just two. We’re going to talk about the differences between an LLC and an S corporation, because that's the most common one we think of. The difference really is this, the difference between a C Corporation and an S Corporation is simply one of taxes, they are otherwise identical, and a C Corporation has its own tax life, and an S Corporation is a pass-through entity that passes its tax experiences on to the shareholders. Same thing goes for an LLC. You can have a pass through or a non-pass-through LLC, and so thus, they are the same. Now we’re back to the first question, LLC versus C Corporation, and here's the funny answer; they’re both about the same. What's the difference? the difference is this, the C corporation or the corporation of any form has been around for a long, long, long time as in, let's just say, hundreds of years, and let someone prove me wrong. In doing so, the way it has evolved is a problem is discovered, and they would fix it, another problem is discovered, they fix it, and so over the course of the millennia we've got a great deal of case law which defines exactly what happens under a great number of circumstances, and it fixes it. Think of it as kind of a leaky pipe that's been patched over, and over, and over again. It is so well patched it is not leaking anymore, there is no question. It may be little ugly, and cumbersome though. That’s where the LLC comes in. Short answer is it's called a limited liability company. It was designed as a response to the Corporation, it is virtually the same thing. It is sort of a cleaned up, leak free version of the Corporation, it will do everything that the other one does only with slightly different terminology. So what's the right answer? Whichever one your attorney is most comfortable working with. Both work fine, don't get caught up in the semantics. If your attorney says, I really like corporations, use a Corporation. If your attorney says, I really like LLCs, use LLCs, and neither one is wrong, both can be just as functional, it's fine. in my personal opinion, I like LLCs. I like those nice, tidy, new things that are all done right the first time, so to speak, but I’ll tell you what, there's nothing wrong, and I actually kind of like the idea of something that has been tried and true, which is what a corporation is. As you make your decision think of us as we are working here at the crossroads of business and family, and give us a call anytime you wish. This is Got Family and I am Carey Berger.

Carey talks about Life Estate

Carey talks about how to unwind a partnership

Carey talks about the family bank

Carey talks about retirement

Carey talks about having one business and multiple children

Carey talks about an alternative to the prenuptial agreement

Hello this is Got Family and I am Carey Berger and as the theme song says, we are talking this time about Johnny Cash and “I've Been Everywhere.” This is just about travel. What it means to travel for business. For those of you who do travel for your business, that list of cities, you may have your own list of them. It's interesting because a lot of folks will have this perception of one of two things. They’ll either think, man your life must be some sort of dream you're constantly traveling, on vacation, it must be wonderful, or they’ll have this idea your life must be some sort of hell. Constantly on the road and never home, it must be just terrible. Truth of the matter is, as those of you who travel know, it's neither. It's just life. It's different. It is not the same as people who don't, but it's just your life. The same thing goes for those of us who are family business, whether we travel or not. Again, lots of folks have perceptions of a business owner that all of it must be wonderful because you are in control. Others say it must be terrible because you're fully responsible and you don't have anybody behind you. They’re both right and they're both wrong and that is the reality. I guess my challenge for each of you out there who's running your own business, whether it's working with Mary Kay or Tupperware or whether it's running a multimillion dollar company, either way my challenge to you would be if you get a chance for at least the people you care about, no you cannot do this for the random person on the street who wants to have their opinion you just you can't fix their problems, but for the people you care about if you think it's possible some of them are still working under the idea that your life is either all heaven or all heck, then if you get a chance let him understand that some parts of their job are really great and some parts of their job are not so great. Same goes for yours. It’s different things, but there's still good parts and bad parts. And guess what? That’s what makes life work. The other part that goes along with that is the perception, oh you're going to be rich you must be incredibly well off because you run your own business. Potentially. I think that is the one part that is really interesting about being a family business owner is that you do have, theoretically the potential that goes beyond just a salary; that's the part that's exciting about it, that’s the financial side. However, there is the concept of the equation of risk and reward and I think that is something to also remind them is that yes, I have the potential for an upside but I also have the reality that if the check doesn't come in there's nothing behind me. There is no guarantee. There is tremendous downside potential and then you get into liability and whether or not you sign as a personal guarantor on the loan for the building and all the rest of that stuff. If you get a chance and if you want to do it, it’s kind of nice for those of you out there running family businesses to spread the word that we are human beings too. And let them know that it is open to both good and there's some bad and yet somehow, we've been everywhere man. This is Got Family and we are telling stories form the crossroads of business and family.

This is Got Family and I am Carey Berger. You know, George Carlin so many years ago talked about the 7 dirty words. For some folks there's another one, there is an eighth and it is called nepotism. Isn’t nepotism a dirty word? And it kind of is in one setting to the extent that nepotism means that we’re going to advance somebody for no reason of their own that they've earned but simply because they’re a member of, sorry it sounds gross, but the lucky sperm club. If that's the only reason why they got advanced then yes, that's a dirty word. It helps nobody, it disenfranchises the employees who are working hard, it dumbs down the capability of the organization because you’ve got someone that is really not able to do the job and it gives a sense of the really dirty word that I am most offended by which is entitlement. That's all a dirty word absolutely no question. However, it is not always a dirty word because there is another way of looking at nepotism and that's this: assuming that the person we’re talking about has all the skills necessary, has made the commitment, has earned their way to that position then you have one more aspect to this human being which is a level of commitment, a level of ownership, a level of involvement even if they're not yet an owner. They feel they are going to be, that this is my family, this is who I am and that commitment is what really shows. when you're really looking for someone that you can count on when the chips are down you take the best and the brightest and you add on top of that one more layer of depth of commitment and that is family and that's okay. Now, does that mean that you should always advance just because they're in the bloodline? Nope. That’s point one. Remember that's the dirty word. You can't have the sense of entitlement. You can’t have that advancement over others who deserve it more. But when those stars align and you can develop somebody, absolutely. The other thing is two, communication. The other people who are involved in the organization should be well aware if XYZ person Junior, your son, your daughter, your cousin, whoever is in the family has been working hard and earning it. It shouldn't be a big surprise that he also has one leg up and it is just reality. And to some extent if an employee at some point is upset you say hun, you have to understand you knew all along this is the family business. I still will advance you as everybody else as the opportunities arise but yes there is one dimension that you can’t control and to that extent you will have to make a decision whether you do want to be part of this organization. Hopefully there are other reasons why they like it even better, but we can talk with that another time. For the meantime, I don't think nepotism is a dirty word. This is got family and I am Carey Berger.

Carey talks what is equal vs what is equitable

Carey talks being an entrepreneurs vs employee

This is Got Family. I am Carey Berger and again we’re telling stories from the crossroads of business and family. We always talk in terms of personal, financial and structural. This one is structural again, and in this particular case we are going to talk about a specific type of trust known as a dynasty trust. The word dynasty you can kind of picture the 70s TV show, it used to be called many different things but the general idea is it goes on for more than one generation. Generation-skipping transfer trust is another term that we use on occasion. The dynasty trust, what it does is it says theoretically when I give this asset to this trust I'm giving it forward in generations potentially, depending on state laws and other details for many, many generations going forward. There may be people who are as yet unborn that in that moment if I did this today, this year, this moment, that's the day I signed the paper and the day I put that asset in there, that asset went into that person's name today even though they weren’t born for another 50 years. That's how a dynasty trust works and that's where its power comes from. It's so powerful in fact that the government created a weigh gate on there to measure how much we let go through. They have a certain amount, a limit, a credit against which you can go ahead and transfer in multi-generations. But beyond that amount is only subject to an additional level of tax on top of the estate tax. So, it requires some very sophisticated planning and very capable attorneys who work in this area in order to do this this. This is not a do-it-yourself job. But if you’ve got the right team and if it's appropriate for you to look at assets that you think will not be spent for your lifetime or your children's lifetime and maybe not by your grandchildren's lifetime, then you should be looking at a dynasty trust. If you think the assets will be consumed before that time it’s probably unnecessary and probably needlessly cumbersome. But if you do have assets you're pretty confident that they're going to last for multiple generations, protecting it for multiple generations sounds like this: I die I would otherwise pay a tax of $0.50 and my children get $0.50. They die they would pay a tax of half of that so it goes down to $0.25. If they died there down to… you get the picture, right? Conversely the dynasty trust I get it in there the same dollar is still a dollar six generations from now, plus the interest, the growth and all those other things that happen. It’s a very powerful tool. Incredibly powerful tool. If you have assets that are going to last many generations check into a dynasty trust and again check out our show. We are Got Family at GotFamilyMedia.com. I am Carey Berger, and we tell stories at the crossroads of business and family.

Carey talks Charitable Donations

Carey talks Business Valuation

On this episode of Got Family: Momentum with your business Wills and Trusts: Different people with different needs and taking care of them equally--personal/financial/structural

On this episode of Got Family: When is the right time to buy/sell and avoiding the ill-timed "tax" Doing business with someone you have a relationship with Using a mediator during a sale and what questions will be asked Expanding a successful business through acquisition

On this episode of Got Family: Year end planning Some of Carey's favorite stories from the crossroads of business and family Family Business: Where do emotions come in? Holidays and family business

On this episode of Got Family: The Got Family Seminar A family situation involving someone with special needs--personal/financial/structural points of view Should I buy a second home?

On this episode of Got Family: How technology has changed our business expectations Working by remote Using a retirement adviser/counselor Finding your next house and the realities of retirement Retirement: Equal vs equitable

On this episode of Got Family: Transferring assets to a trustee-- related to family vs. not related to family How can I spend more time at my vacation home?

On this episode of Got Family: Premarital disclosure form Selling the business discussion with Mark Glass

On this episode of Got Family: Developing a business plan: success in one field and trying to be successful in a different field What works in one area- may not work in another Retirement- different forms and potential risks Expanding a business: taking a business public and franchising Boundaries within a family

On this episode of Got Family: Reality Counselor Conversation with attorney Emily Hartz Recourse vs non-recourse financing

On this episode of Got Family: Who makes the decisions in this relationship? Conversation with attorney Emily Hartz

On this episode of Got Family: Thinking Locally and Globally Within Your Business Looking Forward Within Your Family and Your Business How to Structure Your Charitable Desires

On this episode of Got Family: BATNA-- Best Alternative To a Negotiated Agreement Prenuptial Agreement and Full Disclosure Nepotism 2014 Timeliness Getting to Know Carey