Treating children fairly while preserving the family business

Situation:

A couple in Chicago was concerned about how to treat their two children fairly while perpetuating their illiquid commercial real estate business after their passing.

 

Action Steps:

The business had grown over the years to 35 employees, including their son who had worked there for 20 years and was serving as CFO. They also have a daughter who has three kids and is married to a dentist in Maryland.

The client wanted to treat each child equally, but they were concerned about what would happen to the real estate portfolio if it had to be split, and about the potential of it creating disagreements among their two children.

Their estate planning attorney brought in Grant, Hinkle & Jacobs to design a life insurance policy that would provide the immediate cash needed to equalize the heirs’ inheritances without having to sell or encumber the real estate.

It also fit hand-in-glove with the company’s established legal framework and could also be used to help mitigate potential estate tax liability.

 

Results:

The client is thrilled that they will be able to preserve their commercial real estate portfolio for the next generation and use the life insurance to avoid creating a financial situation that could lead to the deterioration of relations between their kids when they are no longer there to intervene.