Karl R. Bareither, CLUWealth Transfer Specialist

Ph: 805-595-2089 Email: karl@fbrsystem.com

Wealth Transfer Planning – Overview

Family & Business Objectives

The FBR System

A holistic approach to planning, not transactional

Treats wealth as more than just property

Recognizes the importance of open family communication to the planning process

Acknowledges that planning is a journey, not a destination

Family and Wealth

What is your Definition of wealth?

Family Business Statistics88% of current family business owners believe the same family or families will control their business in five years, but succession statistics undermine this belief... •Only about 30% of family and businesses survive into the second generation •12% are still viable into the third generation•only about 3% of all family businesses operate into the fourth generation or beyond1

1Family Business Research Institute

The Need For More Effective PlanningStatistics reveal a disconnect between the beliefs and reality.

This information indicates lack of family business succession planning.

This was confirmed by our own survey which indicated the importance of including all family members.

Wealth Transfer Challenges

The ownership succession planning issues that seem to be the most common areas of contention or omission in family business succession planning are:

1.Technical mistakes

2.Planning in a vacuum

3.Leaving the business to the surviving spouse

4.The challenge of treating children equitably

Secrecy ControlPower

AutocraticHead/Ego

OpennessSharing

KnowledgeCollaborationHeart/Spirit

Creating and Preserving a Business

Creating Transferring

From owners only… …to the entire familyThe FBR System

introduces a unique approach

to planning that

involves the entire family..

The Family and Business Renewal ModelPhase IExamine

Current Plan

Phase IIDevelop New Plan

Phase IIIPresent &

Implement Plan

The FBR System is a proven success

model that has saved business owners

millions of dollars while

preserving the family business.

12

3

4

567

8

9 Your Wealth

Transfer Plan

Interview each person individually Business family members and

spouses Passive family members and

spouses Key employees

Step 1: Individual Family Interviews

Clarify personal goals, concerns and intentions of each family member

Step 2: Determine Family Objectives

Identify family and business expectations and concerns.

Review existing owner and business documents: Financial Statements Income Tax Statements Life Insurance Policies Business Agreements Wills Trusts

Step 3: Analyze Current Plan

The Wealth Transfer Specialist will:

Completion of Phase I

Understand the existing wealth transfer plan

Understand the goals, concerns, hopes and dreams of each individual family member

How, when and to whom will leadership of the business be transferred?

Step 4: Examine Transfer Options

Wills Trusts Gift Buy-sell agreement Reorganization Sale (family members or

non-family buyer) Charitable arrangement

We examine various tools and techniques to determine which ones should be incorporated into your personal plan.

Meet with trusted owneradvisors, examine options,

and draw conclusions

Step 5: Seek Advisor Input We work collaboratively with your existing trusted advisors – we value the work they’ve done and the knowledge they have shared with you.

Step 6: Develop the New Plan

Determine wealth transfer options

Organize information Seek to satisfy both family and

business concerns Promote decision-making that

is both sensitive and pragmatic

The WTS

Completion of Phase II

Creates a written report detailing the new plan

Determines the most viable options for transferring the family’s wealth

Step 7: Present New Plan

The Family Retreat:

Present new plan Examine business

financial, legal and tax issues and options

The art of planning

and facilitating

a family retreat is

part of the FBR

System

Consider viable options for providing needed liquidity

Sale of assets

Loan

Insurance

Sinking fund

Step 8: Consider Liquidity Options

Obtain agreement to implement plan

Complete financial, tax, and legal requirements

Monitor plan progress

Step 9: Implement and Monitor Plan

The Family and Business Renewal ModelPhase IExamine

Current Plan

Phase IIDevelop New Plan

Phase IIIPresent &

Implement Plan

12 3

4

56

8

9 Your Wealth

Transfer Plan

7

The FBR System is a proven process that has been successfully used with hundreds of business owners.

What are the costs and benefits?

Cost dependent upon: scope of work number of family members complexity of business Expectations

Defining Your Investment

Free initial interview Planning fee is established

1. It’s a family affair not just an owners affair

not just a transaction

not closed and secretive

not a telling one

not exclusion

not closing discussion

1. It’s a family affair

2. It’s a process

3. It’s an open agenda

4. It’s an asking format

5. It enhances family life through inclusion

6. It’s a way to open family dialogue

12 Principles of Family and Business Renewal

7. The greatest resource is people7. The greatest resource is people

not plant, equipmentand real estate

not one at the expense of the other

not a whitewash

not excluding anyonewho may differ

not a free-for-all or anger tirade

not a risky venture

8. It deals with both external and internal matters

9. It ensures an examination of all issues

10. It seeks input from owner advisors

11. It uses an objective planner as a facilitator to plan a family retreat

12. It assures a money-back guarantee if not totally satisfied

12 Principles of Family and Business Renewal

We encourage your questions and

comments!

Comments and Questions

Thank You!

FBR Systemwww.fbrsystem.com805.595.2089

Karl BareitherFounder, CLU, Wealth Transfer Specialistkarl@fbrsystem.com