Women In Family Business – The Importance of Clarity

By Patricia Annino, J.D., Thomas Davidow, Ed.D. & Cynthia Adams Harrison, Ed.D., LICSW

The Importance of Clarity

family business imageThe more you and your husband agree to treat the business as a performance arena in which preparation is everything, the more productive your child will be. Similarly, the clearer you can be in terms of creating structures, the better off your child will be when he does enter the business. Being proactive about creating routines through governance structures or through accurate job descriptions is very helpful. If your child is already working in the business, you and your husband can discuss how to create sensible structures with appropriate boundaries. Everyone performs better when they know what’s expected and what the rules are.

Be Informed-Be Influential – Points to Remember

  • If your husband resists talking to you about the business or is upset about something at work and won’t share why, don’t take it personally and don’t give up.
  • Men and women really are different in how they think, behave, feel good about themselves and communicate.
  • When you set a limit for your husband, you are actually encouraging him: You are telling him that he is capable of achieving his goals as a businessman, husband and father.
  • It is possible to find the balance between creating objective criteria for your child’s performance in the business and maintaining family harmony.
  • There’s a difference between granting your child the automatic right to work in the business and giving him the opportunity to do so.
  • Things go best when there is consistent communication between you and your husband and between both of you and your child.

 

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Effective Risk Planning

Image of a womanOn the topic of risk I just came across the Family Office Exchange white paper, “Securing the Future: Managing Threats and Opportunities Through Effective Risk Planning” (October 2009) and was impressed with how thorough this study is.

I recommend it to anyone who is advising high net worth families and/or family owned businesses. Its intent is to develop a process for managing risk to diffuse reactive, irrational decision making and puts forth the best strategies for managing downside risks while emphasizing the importance of capitalizing on new opportunities for wealth enhancement.

It is a wonderful roadmap for a proactive approach for risk management across the critical issues that families face. To quote Arie de Geus, the former head of strategic planning for Royal/Dutch/Shell, “nobody can predict the future, therefore one should not try. The only relevant discussions about the future are those where we succeed in shifting the question from “whether something will happen” to the question “ What will we do if it does happen?”

For more information about the Family Office Exchange white paper visit: https://www.familyoffice.com/knowledge-center/securing-future-managing-threats-and-opportunities-through-effective-risk-planning

My three key areas “at risk” for family business are family cohesiveness, business ownership and wealth management. Here’s a look at what they mean:

 

Family Cohesiveness

In the area of family cohesiveness, reputation or the family brand is at risk. Traditionally this risk was triggered by a scandal that leaked out to the press. The new way this risk is triggered is through the Internet. Videos on YouTube and comments on Facebook, Twitter and other social media networks can affect your client’s family’s reputation. They can be used in divorce litigations, custody matters and employment decisions. Once viral, it is hard to remove.

The younger generation, if not educated, is not mature enough to understand the afterlife omnipresent power of the digital era. A family risk-management policy should include education about the dangers of social media and a morally binding decision among family members to understand the consequence of social media on the reputation of the entire family.

Business Ownership

Another risk to family cohesiveness is the impact to individual goals and life plans.

Traditional risks included the illness, death or incapacity of a key family figure.

In the family business, the new risk is the increased work lifespan of the older generation, which results in the delayed succession of the middle generation. With the older generation in good health and working longer, the individual goals plans of the middle generation may be passed over.

Intentional strategic planning and clear communication among all generations as to what the expectations are for the working lifespan and when the baton should/will pass can mitigate this new risk.

Traditional risks to business ownership and the economic sustainability of the family enterprise include the death or the divorce of a shareholder when proper planning is not put in place.

The new risk is the evolution of laws governing how assets are allocated in a divorce. In some states, gifted and inherited assets are divisible in a divorce. This does not just include what the about-to-be divorcing family member owns when married; it also includes the expectancy of what that divorcing family member will receive in the future.

Those expectancies are taken into account when determining the allocation of assets between the couple about to be divorced.

A significant side effect to this is how a hostile soon-to-be ex and their attorney will value the family business assets and put that valuation into the public realm of divorce court. The goal of that hostile divorcing member is to value that business high. That valuation may do serious damage to the estate plan of the older generation.

There is also an increased risk for the allocation of alimony. Many family businesses have phantom income that is earned during the course of the marriage that shows up on the tax return and is plowed back into the family business. At issue is how that phantom income should be treated for alimony purposes.

If it was earned during the marriage, is it marital income taken into account for alimony and child support purposes even though not actually received?

When thinking about these risks, it is important to remember that the law and the court in the jurisdiction of the divorcing spouse that will control these decisions. These risks can be mitigated by a well negotiated pre-nuptial agreement or post-nuptial agreement.

Wealth Management

Traditional risks related to a family’s wealth (including financial, intellectual and social assets) include the illness or death of the key family stakeholder, economic downturn and changes in the regulatory or legal environment.

The dissipation of wealth sometimes triggers new risks. With each ensuing generation, wealth is splintered. Besides that, new risks also come from the lack of creation of new wealth during turbulent economic times, the increased complexity of legal and tax matters and the increased complexity of wealth management choices.

These risks can be mitigated when the family coordinates its advisers and monitors the integration of all professional services.

The risks are further mitigated when the family embraces and encourages financial education and financial literacy across the generations. Mentoring, shadowing, exposure to the concepts and resources along the generation continuums reduces unintended consequences.

Risk taking is an essential part of getting ahead. Be sure and invest in yourself and understand and evaluate your risks before you take them.


Patricia Annino
is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Women’s Leadership Role in the Family Business

women in business, family business word cloud image I have been reflecting on the rising role of women in leadership in family businesses and what that means. Based on my more than three decades of working with family businesses I have observed that the leadership style of women is quite different than that of men. These are personal observations. Psychoanalyst Jean Baker Miller, the author of Toward a New Psychology of Women, and first director of the Stone Center at Wellesley College, developed the “Relational-Cultural Theory” with her colleagues. Their work suggests that all growth occurs in connection, that all people yearn for connection, and that growth-fostering relationships are created through mutual empathy and empowerment.

The other side of this is disconnection – when the relationship connections no longer work or have become uncomfortable. When this happens, if the less powerful person is able to express her feelings and the other person is able to respond empathetically, disconnection can actually lead to a strengthened relationship and a strengthened sense of relational competence. If, however, the injured or less powerful person is unable to express her feelings or receives a response of indifference, she will begin to keep aspects of herself out of the relationship in order to maintain the relationship.

This very complicated analysis is at the heart of the difference between men and women in the work force, and in my experience working with in the family business too. Because so much of what a woman values is the connection and the relationship with others, when that is not reciprocated or encouraged, it can impede a woman’s ability to succeed.

For the most part men, on the other hand, don’t have that problem. They measure their success on their individual ability to get ahead and are not as bogged down by how they are judged in relationships with others. Generally, they are also not afraid of ruffling the feathers of those they work with to achieve success.  The fear of controversy can impede women from attaining higher levels of success because women do not instinctively understand that ruffling feathers and creating controversy does not mean that the relationship will end; in fact, it can mean that working through that will improve the relationship and lead to greater success for all. Women are afraid to risk the relationship for personal reward.

This fundamental difference in the way that men and women approach success in business is amplified when family is involved. In a provocative example, I asked three women in family business leadership positions if they competed for their position. In all three instances the immediate reaction was no. When I asked follow-up questions, “Didn’t your brother want the job too?” “Did someone just say now you are the President?”  All three women changed their answer to “I guess I did compete but I really don’t think of it that way”.

For many women today overtly acknowledging competition is just not done. In the family business, all of this is amplified.  In addition to concerns about peer approval and connection there is still the Thanksgiving dinner table and what the rest of the family will think about their leadership of the family business and how they got there. To me, this means that as women leadership in family business will continue to increase, what it means to the woman, the family business and the family itself will continue to evolve.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Goals of a Strong Family Bonded to a Strong Family Business

A third generation family business I have worked with for many years employs all family members and all in-laws whofamily business choose to be employed. Each has a defined job with a job description and is paid according to the responsibilities that member undertakes – not according to how they are placed in the family system. All family and non family members are given performance reviews and their advancement within the organization is merit based.

The legacy of this family is entrepreneurism and safety net, with the additional twist of merit. Because this has been thrashed out, anyone wanting to work in the business has to perform. One son decided not to work in the business and started his own enterprise. He wanted total control of his destiny. That was his choice and it is well respected by all family members.

The goal that the family working together shares is to build a strong business and a family unit that is economically entwined. The underlying premise is that they are stronger together than apart. The CFO is a son-in-law who is as valuable to the family and to the business as any of the sons. This family includes in-laws in its core definition and there has not been a divorce at the second generation. I am sure that the holiday dinner tables focus on business as that is the lifeblood of the family. However, anyone entering the family must decide how comfortable he or she would be in that immersion. And after observing families for more than 30 years it is now clear to me that anyone who is entering a family where the key focus is business must accept that it is what binds the family together, is a fundamental part of all family discussions, and that will not change.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Managing Estate Goals in The Family Business

12-9-14_managing_estate_goalsIn life there will be major goals, and supporting goals. Major goals should be set in the areas of business (including career, family business), finance (including family wealth), education (including what it means to the family and how it will be paid for), family (marriage, children, extended family), creativity (artistic, visionary interests), physical care (health and exercise), public service (issues of importance), faith (religious services, education and participation), and community (whether the community is local such as the town or city, or virtual through other connections).

These goals all connect with each other and when built together, create a sustainable family system grounded in the “true north values” – the course the family wants to go, as well as its ultimate destination and arrival time.

The goals should align with the fundamental values. For example, if the fundamental family values are entrepreneurism and a sense of family safety and if a major goal is to establish a profitable family business in the local community that will employ and support this generation and following generations, then each of the areas referenced above should be explored as part of the goal-setting process.

Goals will change as life and generations change. In some ways legacy goal setting (at the Meta level) is akin to Maslow’s hierarchy of needs. However, at the foundational base are the true north values that each family has. The goals and objectives build from those values and plot the course for the future shaping of the legacy.

These goals will include financial safety and survival, and then when congruent with the true north values will lead to sustainability and perhaps affluence. Financial security or affluence may lead to a greater desire to take care of the community and world at large. Of course, for most families this is not linear; it is just that the emphasis shines on different phases at differing points. Many families know what their true north is, work hard, have faith, and give back to the community and world at large. It is just that the amount of emphasis placed on each sector changes as the need the sector faces changes.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Who Will be the Captain of Your Estate Planning Ship?

Excerpt from Patricia’s new book: It’s More Than Money: Protect Your Legacy

“The thinking that created today’s problems is not the thinking that can solve those problems.” ~ Albert Einstein

9-14-2014 It's More Than Money Book CoverYour life and the legacy of your family is a movie (with sequels), not a snapshot. Why then do so many of us view our family values, financial decisions and legal documents as stand alone decisions that do not correlate with each other, are not compared to each other and are not integrated?

In my thirty years of practicing law and working with many families and family businesses in estate planning I have come to the conclusion that the most important role the head of the family can play is “Captain of the ship”. Effective planning is a bit like sailing.

When a captain sets off for a long sail, he needs to understand where he is going, how he is getting there, and what may occur along the way. Nature will always intercede. Weather and winds will change; storm waters and other hazards may lie ahead. But what is important is to set the plan and then stay flexible and keep checking the actual course against the planned course, and while doing that, to keep in mind the position of the compass set to “true north” – a fixed point centered on the values that are most important to you.

The elements of sailing are the foundation (an internal compass set to true north), goals and objectives (the mapped course) and the enabling structure (boat and sails). It is the responsibility of the Captain of the ship to be aware of all external forces (ocean, weather and wind) while sailing. The one element that is fixed is the direction of the compass – set to true north. All other elements must be congruent to true north and to each other. That gives the journey the best shot at success and sustainability.

For a family, sustainable planning includes the same elements – the foundational elements (values e.g. family first), the goals and objectives (how those values will be translated in life – family business, family investments, philanthropy, family activities) and the enabling structure (legal estate and business planning documents, financial investments and the team of advisors).

It is the responsibility of the family leader (the Captain) to be aware of all of these elements in the context of all external forces (changes in family members, changes in advisors, world economics, and business risks) while navigating life and legacy. These elements must all be congruent to the foundational family values and to each other. That gives the family the best shot at sustainability and legacy.

For many families the elements are done independently – with separate advisors who do not know each other, never speak and do not have direct knowledge of what the others are doing. And for many families at least one of these elements may not be done at all or may be quite outdated.

For a plan and its legacy to be sustainable, the elements must be integrated and congruent. The legal plan should align with the family goals and match the legal and financial documents. If your family is connected by a family business, real estate or philanthropic endeavor, is the estate plan for the family system in agreement with its financial plan and the family objectives? A congruent plan increases the probability of sustaining what that family has worked so hard to put in place and builds its legacy.

For most families the answer to this question is “no”, but not for a lack of effort. It is because a plan is built up over many years by many independent professionals – the estate planning attorney, the accountant, the financial planner, the banker, the life insurance professional, and the philanthropic advisor – each focused on a different part of the system. Even though their work may be independently excellent, most of the time they are responding to a need that was expressed in a certain time frame – minimize estate taxes, determine who should control the vote of the company stock, equalize the assets, protect assets from a child or sibling divorce, etc. Even if the “team” communicates well at these independent junctures, it is unlikely that communication is deep or continuous.
Professionals focus on what they know. Every well-meaning and talented advisor goes back to his/her specialty to answer a need or solve a problem. Some families have a family office or trusted advisor they are fortunate to work closely with.

Experience has shown that this improves communication but does not provide the unique perspective that can be viewed when zooming down on the system from 30,000 feet above. Perspective is important. It is only when the system is independently reviewed from on high – from that 30,000 foot level – that black holes in coverage – those areas that no family member or advisor thought of because each was focused on his own specialty – become readily visible.

No advisor can do that for you. It is your responsibility, as the family leader, to make sure all the elements of your plan are congruent, and the best way to for you to do so is to view the planning as Captain of the ship from that “on high” perspective.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning. She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about. Annino recently released her new book, “It’s More Than Money, Protect Your Legacy” available at Amazon.com. To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Women in Family Business – The Importance of Clarity

By Patricia Annino, J.D., Thomas Davidow, Ed.D. & Cynthia Adams Harrison, Ed.D., LICSW

The Importance of Clarity

The more you and your husband agree to treat the business as a performance arena in which preparation is everything, the more productive your child will be. Similarly, the clearer you can be in terms of creating structures, the better off your child will be when he does enter the business. Being proactive about creating routines through governance structures or through accurate job descriptions is very helpful. If your child is already working in the business, you and your husband can discuss how to create sensible structures with appropriate boundaries. Everyone performs better when they know what’s expected and what the rules are.

Be Informed-Be Influential – Points to Remember

  • If your husband resists talking to you about the business or is upset about something at work and won’t share why, don’t take it personally and don’t give up.
  • Men and women really are different in how they think, behave, feel good about themselves and communicate.
  • When you set a limit for your husband, you are actually encouraging him: You are telling him that he is capable of achieving his goals as a businessman, husband and father.
  • It is possible to find the balance between creating objective criteria for your child’s performance in the business and maintaining family harmony.
  • There’s a difference between granting your child the automatic right to work in the business and giving him the opportunity to do so.
  • Things go best when there is consistent communication between you and your husband and between both of you and your child.

 Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

 

 

Patricia Annino Receives “Best in Wealth Management” Award

The Euromoney Legal Media Group chose Patricia Annino, Chair of Prince Lobel’s Estate Planning and Probate Practice Group, to receive the prestigious “Best in Wealth Management” award at the second annual Americas Women in Business Law Award ceremony held May 24, 2012, in New York City.

Selected from a short-list of eight well-known, highly-qualified nominees, Patricia’s award was based on extensive peer review research conducted by Euromoney’s research team, her professional accomplishments during the past 12 months, and her advocacy and influence in the field of wealth management.

Following the success of similar award ceremonies in Europe and Asia, the Americas Women in Business Law Awards was launched by Euromoney Legal Media Group to give law firms and professional services firms the recognition they deserve for their efforts in helping women advance in the legal profession.

Patricia Annino is a nationally recognized expert on estate planning and taxation, with more than 25 years of experience serving the estate planning needs of families, individuals, and owners of closely held and family businesses. She speaks regularly on many issues of concern to family owned businesses, including succession planning, risk management, managing a business with multiple stakeholders, the risk of divorce, and more. Annino is a graduate of Smith College and Suffolk University School of Law.

Patricia is the author of two widely utilized professional texts: Estate Planning in Massachusetts, and Taxwise Planning for Aging, Ill, or Incapacitated Clients. Patricia’s recent books for consumers include, Cracking the $$ Code: What Successful Men Know and You Don’t (Yet), Women in Family Business: What Keeps You up at Night, and Women & Money, A Practical Guide to Estate Planning.

About Prince Lobel

Prince Lobel Tye LLP is a full-service law firm providing a wide range of services for Fortune 1000 companies, closely held businesses, and individuals. Prince Lobel’s attorneys are guided by the highest standards of legal excellence, professionalism, and service – whether they are addressing complex business issues or providing advice on personal legal matters. Practice areas and industries served encompass corporate law, data privacy and security, domestic relations, employment law, estate planning and probate, insurance and reinsurance, intellectual property and Internet law, litigation, media law, nanotechnology, real estate, telecommunications law, construction law, environmental law, renewable energy, health care, and education. For more information, visit Prince Lobel at PrinceLobel.com.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

How Psychedelic Drugs Can Help Patients Face Death & What it Means to Estate Planning Effected Towards the End

I recently read an article in the New York Times (read article here: http://nyti.ms/Kp9yct) about a study using Psychedelic Drugs to help patients cope with facing death as the result of a life-ending diagnosis, like cancer.  In the article it indicated that these end-of-life researchers only included otherwise healthy patients, those with no indication of mental illness, in the study.

These drugs are also being examined as treatment for alcoholism and other addictions.  While I can see the advantages of such treatment for those facing the end of their lives due to grave illnesses, it also makes me very aware of how this might affect the ability for someone to consider and finalize their estate planning needs at a time when they are not only facing their own demise, but while under the influence of psychedelic drugs.

Could this open up their decisions to scrutiny after their death?  Even though they are otherwise considered of sound mind, does this open the door for others to challenge a person’s Will or other estate planning functions finalized after such diagnosis, and while using psychedelic drugs.

I am an advocate for putting your affairs in order early on, long before you might be facing something like this, but the reality is, even if plans had been made, depending upon the individual situation, such a diagnosis could cause someone to rethink or alter their plans.

It seems like we would need to take some sort of extra steps during this process to make sure we can forego any challenges that could or would be made to change your final wishes.  I’m not exactly sure what that might look like, how we could provide verification of your ‘sound’ mind at such a time.

What do you think?  Leave your comments or questions below and expand the discussion!

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

Women In Family Business – The Importance of Clarity

By Patricia Annino, J.D., Thomas Davidow, Ed.D. & Cynthia Adams Harrison, Ed.D., LICSW

The Importance of Clarity

The more you and your husband agree to treat the business as a performance arena in which preparation is everything, the more productive your child will be. Similarly, the clearer you can be in terms of creating structures, the better off your child will be when he does enter the business. Being proactive about creating routines through governance structures or through accurate job descriptions is very helpful. If your child is already working in the business, you and your husband can discuss how to create sensible structures with appropriate boundaries. Everyone performs better when they know what’s expected and what the rules are.

Be Informed-Be Influential – Points to Remember

  • If your husband resists talking to you about the business or is upset about something at work and won’t share why, don’t take it personally and don’t give up.
  • Men and women really are different in how they think, behave, feel good about themselves and communicate.
  • When you set a limit for your husband, you are actually encouraging him: You are telling him that he is capable of achieving his goals as a businessman, husband and father.
  • It is possible to find the balance between creating objective criteria for your child’s performance in the business and maintaining family harmony.
  • There’s a difference between granting your child the automatic right to work in the business and giving him the opportunity to do so.
  • Things go best when there is consistent communication between you and your husband and between both of you and your child.

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

 

css.php