${site.data.firmName}${SEMFirmNameAlt}
Throughout Southern California
310-324-9403
Toll-Free
866-402-1805
View Our Practice Areas

Incentive Trusts: A Business Succession Formula for Success

6a017d3e6b2617970c019103a3abed970c-320wi.jpgFor many of our affluent clients, their single largest investment is the family business. Unfortunately, the likelihood that this investment will survive the transition to the next generation is remote. Less than one-third of family businesses survive the transition from the first to the second generation, and only about 10 percent survive the transition to the third generation, according to stats reported in the Harvard Business Review.

For those planning for the succession of their family business, there are some troubling statistics to consider when it comes to heirs and inheritance. While these statistics can be traced to a lack of motivation and hard-fought discipline, a trust may hold the key to success. This matter was addressed in a recent article in the Journal of Financial Planning titled "Investing in Future Generations: Evolution of the Business Skills Trust."

First, the troubling statistics: "Less than one-third of family businesses survive the transition from the first to the second generation, and only about 10 percent survive the transition to the third generation, according to stats reported in the Harvard Business Review." While wealth can be transferred through a bit of effort on the planning side, it is not the same as transferring the motivation and the ability to pull it off thereafter.

How can a trust help with motivation and to train up ability? That depends on how you frame the trust and the conditions you set to slowly bring a beneficiary/heir up to speed. The original article has some very specific advice, but the main point is that incentive-based trusts are a powerful tool.

If you have a business that needs to be run, and a legacy to leave behind, then you could do well with an incentive trust plan. So, what values do you enshrine in the trust and how do you offer incentives? The answers to these and other salient questions are specific to each and every situation and family.

No Comments

Leave a comment
Comment Information
Email Us For A Response

Find Out The Difference That Experience And Expertise Makes

Get the peace of mind that you deserve. First, attend a seminar. This will entitle you to a free initial consultation and a discounted estate planning fee. To learn more about our services or sign up for a seminar, contact us online or call us at 866-402-1805. We have offices in Torrance, Orange, Newport Beach, Pasadena and Woodland Hills.

Questions? Contact Us.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Call Now For A Free Consultation: 866-402-1805
  • ${site.data.firmName}${SEMFirmNameAlt}
  • Main Office: Torrance

    Torrance Office
    990 West 190th Street
    Suite 500
    Torrance, CA 90502

    Toll Free: 866-402-1805
    Map & Directions

    Orange Office
    333 City Boulevard West
    17th Floor
    Orange, CA 92660

    Toll Free: 866-402-1805
    Map & Directions

    Newport Beach Office
    5000 Birch Street
    Suite 8000
    Newport Beach, CA 92660

    Toll Free: 866-402-1805
    Map & Directions

    Pasadena Office
    790 East Colorado Boulevard
    9th Floor
    Pasadena, CA 91101

    Toll Free: 866-402-1805
    Map & Directions

    Woodland Hills Office
    5850 Canoga Avenue
    4th Floor
    Woodland Hills, CA 91367

    Toll Free: 866-402-1805
    Map & Directions

    Office map
Check out The Law Firm of Kavesh, Minor & Otis on Yelp
Check out Kavesh Minor & Otis on Yelp
Check out The Law Firm of Kavesh, Minor & Otis - Orange on Yelp
Check out The Law Firm of Kavesh Minor & Otis - Pasadena on Yelp