Succession planning strategies for the privately-owned business

It takes a vision to create a legacy

Contents

1 Introduction

2 Protecting your business with a succession plan

4 Overview of the tax transfer system

7 Solutions: tax-reduction strategies

12 A case study

TwoseparatecompaniesissueLincolnlifeinsurancepolicies.NewYorkpoliciesareissuedbyLincolnLife&AnnuityCompanyofNewYork,Syracuse,NY.Forallotherstates,policiesareissuedbyTheLincolnNationalLifeInsuranceCompany,FortWayne,IN.Thesecompaniesareseparatelyresponsibleforsatisfyingtheirownfinancialandcontractualobligations.

Not a deposit

Not FDIC-insured

Not insured by any federal government agency

Not guaranteed by any bank or savings association

May go down in value

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Butmorethan90%oftheroughly23millionbusinessesintheUnitedStateshavesomeformoffamilyownership—includingapproximatelyone-thirdofthelargestpubliclytradedcompanies!¹

Yetonly30%ofthesebusinessessurviveintothesecondgeneration,andonly12%willstillbearoundbythethird.²

It takes a family to employ a nationFortune 500 companies seem to get all the media attention.

Thefateofthefamilybusiness

Why?Twoobviousreasonsarefamilyconflictandhighfederalestatetaxes.Butathirdreasonisperhapsevenmoreinfluential:failure to design a proper succession plan.

Businessownersaretypicallysobusywithday-to-daychallengesthattheyoftenhavelittletimetothinkaboutwhowilltakeoverthebusinessoncethey’regone.Buttheconsequencesofhavingnoplaninplacecouldbecatastrophictothefamily,employees,andotherswhodependuponthebusiness.Forinstance:

•Willthebusinesshavetobesoldinordertopayestatetaxes?

•Ifaco-ownerdies,willtherebeaconflictbetweenthesurvivingbusinessownersandtheco-owner’sfamily?

•Willthechildrenoftheownerwishtocontinuethebusiness?Whatiftheydon’t?

Abusinesssuccessionplaniscrucialifyouwanttopreserveyourhard-earnedbusinesslegacy,protectyourfamily,andkeepthegovernmentfromdiggingdeeperintoyourpocket.

¹www.BizStats.com,accessed2007

²JosephAstrachar,Ph.D.,editor,FamilyBusinessReview,ascitedonFamilyFirstInstitute,www.ffi.org,2007.

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�st generation

business

2nd generation

business

30%

3rd generation

business

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2

It takes a succession plan to protect a business

Although 85% of family-owned

firms say their successor will be

a family member, that may not

happen without proper succession

planning.

In fact, �9% of family business

participants have not completed

any estate planning other than

writing a will.¹

¹ Facts & Perspectives on Family Business Around the World, Family Firm Institute, www.ffi.org, Nov. 2008.

Just what can a succession plan do for you?

Atitsmostbasic,asuccessionplanisadocumentedroadmapforyourpartners,heirs,andsuccessorstofollowintheeventofyourdeath,disability,orretirement.Itcanalsobeusedtoorchestratethesaleofyourbusinessandmayevenhelpestablishthevalueofyourbusiness.Itmayalsohelp:

•Establishwhowouldrunthebusinessifyouretireorpassaway.

•Setpoliciesfordistributionofbusinessstockandotherassets

•Setschedulesfordebtretirement

•Encouragekeyemployeestoremainonthejob

•Protectthebusinessshouldapartnerdecidetotakehisshareandleave

•Helppreventfamilyconflictfromforcingthesaleofthebusiness

•Helpyourheirspayestatetaxeswithoutsacrificingthebusiness

•Provideawaytotakeadvantageofunexpectedexpansionopportunities

Inaddition,havingasoundsuccessionplanmayhelpyouasyouseektosecureyourownretirement!

3

How do you begin?

Establishyourobjectives

Clearlyestablishyourobjectives—whatyouwanttheplantoaccomplish.

Communicateyourplan

Communicateyourvisionwithyourfamily,businesspartners,orkeyemployees.Frankandongoingcommunicationisessential.Notonlydoesitpreventsurprisesbylettingeveryoneknowtheirrole,itcanhelptomanageconflictsthatcoulddisruptyourbusiness.Thekeyistoresolvethemearlyontopreserveyourfamilyandtheongoingsuccessofyourbusiness.

Makeaflexibleplan

Yourplanshouldbeflexible,sincebusiness,family,andhealthsituationscanchangeatanymoment.Makesurethat,regardlessofwhatmayarise,yourbusinessisstructuredtohandleunexpectedchangesandopportunities.Play“whatif”scenarioswiththosewhoareimportanttothebusiness,includingqualifiedlegalandfinancialprofessionals.

Choosing a successor

Istherereallyanyoneouttherewhocanrunyourbusinesswiththeunparalleledstyleandacumenthatyou’vebroughttoit?Well,unlessyou’retheretoshowthemhow,therewon’tbe.

Sodecidewhoisbestqualifiedandstartgroomingthatpersontoday.

Thisstepmaybeeasiersaidthandone.Youmayhaveachoiceofequallyqualifiedchildrenoremployees.Ifmorethanonechildisinvolvedinthebusiness,you’llneedtodecidewhogetstobebossandwhogetsvotingstock.

Ifnolikelycandidatescometomind,youmaywanttoexamineyourhiringandtrainingprograms,orevenyourownmanagementstyle,toseeifthey’rekeepingemployeesfrombecomingleadershipmaterial.

Thesecretistomakeyourdecisionsinawaythatwillallowyourbusinesstosurvive,youremployeestostayhappy,andideally,yourfamilytoremainatpeace.

It’sdifficultforanybusinessownertoletgo.Butgettingthenextgenerationreadytoleadisoneofthemostcriticalwaystoprotectyourcompany’sfuture.

Onceyou’vedonethat,you’rereadyforthefinancialaspect.

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It takes holistic solutions to create a solid succession plan

Thetransfertaxsystemand

businesssurvival

Here are several solutions that you

and your legal or financial advisor

may want to consider for inclusion

into your business succession plan.

5

Estateandgifttaxes

TheEconomicGrowth&TaxReliefRecognitionActof2001(EGTRRA)allowsindividualstopassincreasingamountstax-freeatdeath.Thisamountwillincreaseto$3.5millionin2009.In2010,theestatetaxisscheduledtoberepealedaltogether,butitwillreturnin2011witha$1millionexemption.

Federalestatetaxtablefor2008

Netestatevalue Estatetax*

Marginalrateonexcess

$1,000,000 $0 41%

$1,250,000 $0 43%

$1,500,000 $0 45%

$2,000,000 $0 45%

$2,500,000 $225,000 45%

$3,000,000 $450,000 45%

$5,000,000 $1,350,000 45%

$10,000,000 $3,000,000 45%

$15,000,000 $5,850,000 45%

$30,000,000 $12,600,000 45%

$50,000,000 $21,600,000 45%

$100,000,000 $44,100,000 45%

Scheduledchangesintheestatetaxcredit

YearCreditequivalent Credit

Taxreduction

2008 $2,000,000 $780,800 $435,000

2009 $3,500,000 $1,455,800 $1,110,000

2010 N/A N/A REPEAL

2011 $1,000,000 $345,800 $0

Maximumcreditforlifetimegift

$1,000,000

$345,800

$0

*Estatetaxesshownhavebeenreducedbythe2008taxcreditof$780,800.

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Thetransfertaxsystem

Generallyspeaking,transfersofpropertyaretaxedbaseduponthefairmarketvalueofthepropertyatthetimeofthetransfer.Withafewexceptionsandexemptions,thelifetimetransfersarecombinedwiththoseoccurringatdeath,andaresubjectedtothegraduatedratesshowninthefederalestatetaxtableandreducedbythescheduledchangesintheestatetaxcreditchart.

Keyexceptionsinclude:

•The annual gift tax exclusion.In2008,everyindividualcantransfer,freeofgifttax,upto$12,000peryear,perdonee.Thereisnolimittothenumberofdonees.Toqualify,thegiftmustbeconsidereda“presentinterest.”Thisexclusionincreasesto$13,000in2009.

•The credit.Eachindividualisallowedanestateandgifttaxcredit.For2008,theamountcanbeupto$780,800,increasingto$1,455,800in2009.Thiscreditallowsanindividualtomaketax-freetransfersofupto$2millionatdeathfor2008and$3,500,000in2009.

•The marital deduction.Transfersbetweenspousesdonotincurtransfertaxes,aslongaseachspouseisaU.S.citizen.Theuseofthemaritaldeductiondoesnoteliminatetransfertaxationbutsimplydefersit.

•The charitable deduction.Techniquesareavailabletocombinethetaxadvantagesofcharitablegivingwiththenaturaldesiretoprovideforfamilymembers.

•Life insurance.Ifapersongivesawayalifeinsurancepolicyonhisorherlife,theymustliveforthreeyearsafterthetransfer.Otherwise,thepolicy’sentiredeathbenefitisincludedinthedonor,orinsured’sgrossestate.

Generation-skippingtax

Thetransfertaxsystemimposesataxonassetsateachgeneration,suchasthosepassingfromparenttochild.

Thegeneration-skippingtaxhitsthosetransactionsthataredesignedtoskipageneration.Forexample,agrandparentisentitledtoanexemptionfromthistaxofupto$2millionin2008and$3,500,000in2009.Thisexemptionamountmatchestheestatetaxexemption.

However,thetaxrulesforthesetransactionsarecomplex.Poorplanningcancausetheamountofthetaxtoexceedthevalueoftheassetthatwastransferred!

Businessvaluation

ThevastmajorityofIRSchallengesfocusondisputingataxpayer’svaluationofthebusinessassets.1TheIRSmaybelievethatyourbusinessvalueishigherthanyouanticipated.You,ontheotherhand,wanttohavethevaluelowertoreduceestatetaxes.

IftheIRSwins,yourfutureheirscouldbeforcedtosellalloraportionofyourbusinessinordertomeettheirtaxobligations.Youmaybeabletopreventorreducethepotentialfordisputebyincludingabonafidebusinessvaluationinyoursuccessionplan.

“Fairmarketvalue”isusuallydefinedastheamountawillingbuyerwouldpaytoawillingsellerwithneitherbeingunderanycompulsiontoconcludethetransaction.Aqualified,independentappraisercanbeavaluableally,bothtohelpyousetvalueandworkwithyoushouldadisputearisewiththeIRS.

Oncethefairmarketvalueofyourbusinesshasbeenestablished,twodiscountingmethodsmaybeapplicableduringownershiptransfer.Thesediscountsmayhelplowerthebusinessvaluationatthetimeoftransferandreducetaxesintheprocess.Theuseofeitherorbothofthesemethodswilldependuponthespecificsituation:

•Lack of marketability discount.Whenabuyerorsuccessorcannotbeexpectedtopaythefullmarketvalueofyoursharesduetothelackofareadilyaccessiblemarketforafuturesaleofthoseshares.

•Minority discount. Shareholderswithlessthan50%ownershiplackmajoritycontrol.Thiscouldlowerthevalueofthesharestoyourfutureheirsoranoutsidebuyer,whichcouldreducetheassetvaluesubjecttotransfertaxes.

1“BusinessValuationastheQuarterback,”ErinHollis,IPA’sBusinessToday,InternationalProfitAssociates,Mar.2006.

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Some tax-reduction strategies

These brief descriptions are meant

to provide you with an overview

of potential business succession

strategies. Naturally, they cannot

offer you sufficient information

for you to make a choice. Consult

a qualified business succession

professional to determine which,

if any, of these strategies could be

right for you.

8

Buy-sellagreements

Thesearecontractsbetweentwoormorebusinessowners,whichoutlinethetermsofownershiptransferifanownerretires,becomesdisabled,ordies.Theyaremostoftenstructuredasentityredemption,cross-purchase,or“waitandsee”agreements.

Oneofthemajorproblemswithallbuy-sellarrangementsisfindingthefundsforeithertheownersorthebusinesstobuythedeceasedowner’sbusinessinterest.Lifeinsurancecanoftenbethesourceforthesefunds.

Entityredemption

Thistypeofbuy-sellagreementoccurswhenthebusinessbuysbackanequityinterestfromabusinessowneroradeceasedbusinessowner’sestate.Typically,theestatereceivescashinexchangefortheequityinterest.

Crosspurchase

Thistypeofbuy-sellagreementcallsfortheremainingbusinessowner(s)tobuytheequityinterestofthedepartingordeceasedbusinessowner.Tofundsuchaplan,ownerstypicallybuylifeinsurancepoliciesoneachother.Thesurvivingbusinessowner(nottheentity)purchasestheequityinterestfromthedecedent’sestate.

“WaitandSee”

Thisisahybridbuy-sellstrategydesignedtoprovideflexibilityattheexactmomentit’sneeded,thedeathofthebusinessowner.

Thebusinessentitygetsthefirstoptiontobuythedecedent’sbusinessinterest.Ifanequityredemptionplanseemsbest,thatistheoptionthebusinesswillchoose,andtheestatewillbeobligatedtosellunderabindingagreement.

Ifacrosspurchaseappearspreferable,thebusinesswillallowitsoptiontolapse.Thesurvivingowner(s)willthenhavetheoptiontopurchasethebusinessinterest.

Ifneitheroptionischosen,thebusinessentitywouldberequiredtopurchaseanyremainingbusinessinterest.Thisguaranteesthatthefullvalueofthebusinessisreceivedbythedecedent’sfamily.

Provisionsshouldaddressthefollowingastriggeringevents:death,disability,divorce,bankruptcy,and,inaprofessionalcorporation,lossofaprofessionallicense.

Oneofthemajorproblemswithbuy-sellarrangementsisthesourceoffundsforeitherthebusinessownersorthebusinessentitytobuythebusinessinterestfromthedeceasedowner.Lifeinsuranceisthetypicalsourceofthesefunds.

Theinsurancedeathbenefitsmustbereviewedperiodicallytodetermineifadditionalinsuranceisneededasthevalueofthebusinessincreases.

Giftsofbusinessinterest

Makingalifetimegiftisoftenthemosteffectivewaytoreduceestatetaxation.Dependingoneconomicability,youmaybemoreorlesswillingtomakeasignificantlifetimetransferofwealth.Bymodelingtheassetbaseandcashflowrequirementsbeforemakingthesegifts,youmaydiscoverwhetherornotyoucanaffordtogiveupcontroloftheassets.

Giftscanbemadeoutrightorintrusts.Thebenefitsinclude:

•Shiftinganasset’sincomeandgrowthoutofahigherincometaxbracket

•Shiftingoutofahighestatetaxbracket

•Gainingtaxleverage(Eventhoughestateandgifttaxratesarethesame,thewaythey’recalculatedfavorslifetimetransfers,asshowninthetaxtransfersystemchart.)

•Allowsa“testingground”forfuturemanagementskills.

Thetaxtransfersystem

Comparisonofgiftandestatetaxes

Total value of asset available: $6,000,000

Gifttax*

Tax base:netvalueofassetstransferred $4,000,000

Gift tax:taxratextaxbase $2,000,000

Net transfer to donee:totalassets–tax $4,000,000

Estatetax*

Tax base:totalvalueofassetsavailable $6,000,000

Estate tax:taxratextaxbase $3,000,000

Net transfer to heirs:totalassets–tax $3,000,000

Lifeinsurance

Theuseoflifeinsurancemaybeapracticalplanningtool.Thisisbecausepremiumsarepricedrelativetopolicyproceeds.

Foramarriedcouple,itiscommontousesecond-to-diecoveragetohandleestateliquidityneeds.However,ifthepersonwhoisinsuredownsthepolicy,theproceedsaresubjecttoestatetax.Therefore,lifeinsuranceshouldbeownedoutsideoftheestateinordertoavoidinclusionoftheproceedsandcorrespondingtaxes.Onestrategyistoplacelifeinsuranceinanirrevocabletrustorinownershipbyadultchildren.

Lifeinsuranceisalsotypicallyusedtofundbuy-sellagreements.Inanentityredemption,theentityownsapolicyonthelifeofeachowner.Inacrosspurchase,eachownerownsapolicyonthelifeofeachoftheotherbusinessowners.

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*Assumegift/estatetaxrateof50%.Highestmarginalratein2007–2009is45%.

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Privateannuities

Aprivateannuitymaybeusedinfamilysituations,whereaparentwantstotransferanasset,suchasabusinessinterest,tothenextgenerationfreeofestatetaxes.

Typically,theparentsellstheassettothechild.Inreturn,thechildpromisestopaytheparentanincomeforlife.Thisisalegallyenforceablecontractright,butit’sunsecured.Sincethepaymentstotheparentterminateatdeath,theannuitygenerallyhasnovalueandthereforeisnotincludedintheparent’sestate.

Tobesuccessful,thepresentvalueoftheannuitypaymentshastobeequaltothefairmarketvalueoftheassetbeingsold.Thechildtakestheriskthattheparentwilllivebeyondlifeexpectancy.Andtheparenttakestheriskthatthechildwillnotmeetthecurrentpaymentschedule.Forexample,atage65,theparenthasalifeexpectancyofapproximately20years.Assumingafederaldiscountrateof4%,theannualannuitygeneratedbypropertyworth$100,000is$8,688.Itshouldbenotedthatincometaxesmaybedueattheinceptionofthetransaction.

Self-cancellinginstallmentnotes(SCIN)

ASCINis,likeaprivateannuity,aninstallmentpurchaseofabusinessusuallybytheowner’schild.Unlikeaprivateannuity,however,thetermsofaSCINshouldbeshorterthantheparent’sactuariallifeexpectancy.TheSCINiscancelled,andnofurtherpaymentsaredue,ifthesellerdiesbeforepaymentsarecompleted.TheSCINinstallmentpaymentincludesahigherinterestrateasa“riskpremium.”Generally,nothingwillbeincludedintheseller’sgrossestate,butanydeferredgainontheinstallmentobligationwillbereportedforincometaxpurposes.

Familypartnerships/LimitedLiabilityCompanies(LLCs)

Afamilypartnership/LLCcanhelpshiftboththeincometaxburdenandassetappreciationfromparentstochildrenorotherfamilymembers.However,thebenefitofshiftingincometochildrenyoungerthanage18islimited,becausesuchincomewillgenerallybetaxedattheparents’incometaxrate.

Itisalsopossibletotransferbusinessintereststochildrenandretaincontrolbymaintainingthegeneralpartnership/LLCinterest.Additionally,itispossibletoreceiveadiscountforgifttaxvaluationpurposesifthetransferredpartnership/LLCinterestisaminorityinterest.Discountscanalsoapplyduetothelackofmarketabilityofpartnerships/LLCs.Anyappreciationontransferredinterestshouldnotbeincludedinthetransferor’sestate,assumingavalidpartnership/LLChasbeenestablished.

Managementcontrol

Abusinessownermaywishtogive,bequeath,orselltheequityinabusinesstofamilymemberseventhoughtheownerisnotconfidentthatthenewownerwillbecompetenttorunthebusiness.Thereareanumberofwaystomanagethissituation.

Votingagreements

Thisisoneoftheeasiestandleastexpensivetechniques.Thissimplecontractcancreateavotingblocksufficienttoelectdirectorsanddealwithanyothermattersthatareputtoabusinessownervote.Thecontractshouldbespecificastothescopeanddurationofthevotingagreement.

Proxies

Aproxyisawrittenauthoritygivenbyabusinessownertoanotherindividual,allowingthatpersontovoteonownermatters.Themostcommonuseforaproxyistoallowownerstovote,evenwhentheycannotattendthemeeting.Itsscopedoesnothavetobethislimited.

Votingtrusts

Partiestoavotingtrustagreementsurrendertheirbusinessinteresttotrustees,whorepresentthepartiestothetrustandvotethebusinessinterest.Avotingtrustagreementisgenerallymoredifficulttobreakthanasimplevotingagreement.

Often,businessownersreceiveatrustcertificateasevidenceoftheirbeneficialownershipofthebusinessheldbythetrust.

Votingtrustsmaybedesignedtogivetrusteesfulldiscretiononvotingthebusinessinterest,ortheymaybemorerestrictive.

Beadvisedthatthevalueofthebusinessinterestwillbeincludedinthegrantor’sestateifabusinessownertransfersownershipintoatrustbutretainstherighttovotetheirbusinessinterestforlife.

Publicofferings

Iftherearenofamilymemberstocarryonasuccessfulprivatelyheldbusiness,oneoptionthatcouldhelpcontinuethebusinessisto“gopublic.”

TheSecuritiesActof1933generallyrequiresregistrationofofferingsandsalesmadeininterstatecommerce.

Fullregistrationcanbeanexpensiveprocess.Becauseofthis,boththeadvantagesanddisadvantagesshouldbecarefullyconsidered.

Advantages

•Continuedmanagementofthebusinessintheeventofthefounder’sdeathordisability

•Creationofareadymarketforbusinessinterests,allowingtheownertorealizecash,diversifyinvestments,andexpandthebusiness

•Thecreationofareadymarketattheowner’sdeath,sotheestatecansellitsinterestifliquidityorestatesettlementneedsarise

•Theabilitytoutilizestockincentivestoattractandretaintalent

Disadvantages

•Closerscrutinyofthebusiness(ReportsmustbemadetoownersandtheSECdisclosingthebusinessoperations,financialcondition,andcompensationplans.Thisinformationwillalsobeavailabletothepublic,competitors,suppliers,customers,employees,andfinancialanalysts.)

•Thepotentialinabilitytoreactquicklyinsituationsrequiringownerorboardapproval

•Thecostofinitialregistrationandcontinuingcompliance,aswellasthecostofboardofdirectorandownermeetings,proxysolicitations,andinvestorandfinancialcommunityrelations

Yourfinancialorlegaladvisormayalsobeabletoreviewalternativestofullregistration,whichwouldrequireaseparatebalancingofcostsandbenefits.

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Casestudy

Situation

Twobrothers,50-year-oldDanand45-year-oldBrad,co-foundedanelectronicsupplybusinesswiththreelocations.Bothmenaremarriedwithwiveswhoworkinthecompany,andeachbrotherhasasonwhoworksforthebusiness.

Dan’ssonisolderthanBrad’sandhasbeenworkingfull-timeforthebusinessforanumberofyears.Danalsohasadaughterwhoisnotemployedbythebusiness.Brad’ssonisfinishinghighschoolandworkspart-time.

Dan’snetworthis$3.5million,whileBrad’sis$3million.Almostallofeachfamily’sassetsareownedinthebrothers’names,witheachwifeowningonlyasmallpercentageoftheassets(10%–20%each).Danrecentlyfinishedupdatingestateplanningdocuments,butBrad’sdocumentswereoutofdateandexposedtoestatetaxes.

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Concerns

•Thecurrentbuy-sellagreementisfundedwithlifeinsurance,butmandatesthatthedeceasedbusinessowner’sfamilybeboughtoutwiththeinsuranceproceeds.

•Underthecurrentdesign,thedeceased’sfamilyismadetorelinquishemotionalandfinancialinterestinthebusinessthedeceasedworkedsohardtobuild.

•Sincethebusiness,underpresentcircumstances,isasuccessfulconcern,thisgivesthedeceasedbrother’sfamilynorighttoshareinfutureappreciationofassets.

•Additionally,sincespousesandsonsarealsoemployeesofthebusiness,theycouldeachpotentiallyloseallmanagementpowerbestowedbyvotingrights,andinthecaseofonebrotherpredeceasingtheother,themembersofthedeceasedbrother’sfamilycouldpotentiallyfacejoblossifrelationsbecomeacrimonious.

•Allpersonallifeinsuranceisownedintheestateofeachinsured,whilethebuy-sellcoverageiscross-owned(i.e.,eachbrotherownstheother’spolicy).AsimultaneousdeathofDanandhiswifewouldtriggerestatetaxesjustduetoimproperinsuranceownership.

Potential solutions

•First,determinewhatthefamiliesreallywanttohappenwiththebusinessintheeventthatonepartnerpredeceasestheother.WewerecognizantofthefactthatDanisfiveyearsolderthanBrad,andwouldlikelypassawayorretirebeforehisbrother.

•Basedontheaboveintrospectivediscussion,itwasdeterminedthatthefamiliesdidn’twanttobeforcedoutofthebusinessandmightbeneededtoensurebusinesscontinuityduringpotentiallydifficulttimes.Therefore,themandatorybuy-sellwasfelttobeunnecessary.

•Moveallpersonalinsuranceownershipoutofthetaxableestateofeachfamilymember(spousesincluded).

•Beginretitlinghomesandotherassetsintothespouses’namestoutilizeUnifiedCredits.

•Transferthebuy-sellinsurancetoanirrevocabletrust,sothattheproceedswouldbekeptforthebenefitofthedeceasedbrother’sfamily.Thiswouldallowretentionofthestockandensurestrongfinancialbackingforsaidfamily.

•Astockgiftingstrategywasthenrecommendedasameanstoreducethetaxableestateofthebrotherswhilealsorewardingthesonswhoparticipatedinthebusiness.

•UpdateBrad’sestateplanningdocumentstoreflectthenewbusinesstransferstrategyandcoordinatewithvarioustrusts.

•Thebrothers’estateplandocumentswereupdatedtoreflecttheircurrentneeds.Inaddition,theywereabletoprotecttheirfamilies’ownershipinthebusiness,reducetheirpotentialtaxburden,andhelpensurebusinesscontinuity.

Yourbusinesssuccessionplanistooimportanttoleavetochance.Contactyouradvisortodiscoverhowtoprotectyourbusinesstodayandinthefuture.

A tradition of integrityAtLincolnFinancialGroup,wehavea100-yearheritageofhelpingpeoplefindsolutionstotheirfinancialchallenges—withthesamehonesty,integrity,andresponsibilitythatyou’dexpectfromournamesake.It’salegacythatweproudlyandrespectfullycontinueeachday.Webelieveourcontinuedcommitmenttostrengthandstabilityisindispensabletowhoweareandcriticaltoyourconfidenceinus.Weprideourselvesonbeingabletoidentifyanddeliversophisticatedfinancialstrategiesandproductsolutionsforthecreation,protection,andenjoymentofwealth.Wearecommittedtohelpingclientsredefinetheirretirementbecausewedon’tbelieveretirementisanend—it’sanopportunityforeveryonetostartdoingwhattheyweremeantforallalong.

Importantdisclosures.Pleaseread.LifeinsuranceproductsareissuedbyTheLincolnNationalLifeInsuranceCompany,FortWayne,IN.The Lincoln National Life Insurance Company does not solicit business in the state of New York, nor is it authorized to do so. Contractual obligations are backed by the claims-paying ability of The Lincoln National Life Insurance Company.

InsuranceproductssoldinNewYorkareissuedbyLincolnLife&AnnuityCompanyofNewYork,Syracuse,NY.Contractual obligations are backed by the claims-paying ability of Lincoln Life & Annuity Company of New York.

Productsandfeaturesaresubjecttostateavailability.Limitationsandexclusionsmayapply.

This material was prepared to support the promotion and marketing of insurance product. Lincoln Financial Group® affiliates, their distributors, and their respective employees, representatives, and/or insurance agents do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Please consult your own independent advisor as to any tax, accounting, or legal statements made herein.

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