Family Business Resource Center

Insight & Commentary on Ownership & Leadership Transition, Family Wealth, and Business Succession

We are pleased to share with you a link to a recent article from the Puget Sound Business Journal featuring DWT partner Bill Weigand. At a recent Northwest Family Business Advisors meeting, Bill and fellow family business advisors Dan Gaffney (Moss Adams LLP), Christian Schiller (Cascadia Capital), Richard Simmonds (Pacific Family Business Institute), and Ron Dohr (Pacific Family Business Institute) discussed key takeaways from the Pacific Family Business Institute’s recent survey, Governance & Compensation: The…
Hiring and employing family members is common in the realm of family businesses. An important thing to remember is that most family employees are treated in the same manner as any other employee for federal tax purposes, meaning that their compensation generally is subject to federal income tax withholding and FICA (i.e., social security and Medicare) and FUTA (i.e., unemployment) tax. However, the wages of certain family members are exempt from FICA and FUTA taxes.…
When Congress enacted tax reform in December 2017, federal gift and estate tax “basic exclusion amount” (often referred to as the “gift and estate tax exemption”) increased to $10 million per person (from $5 million), indexed for inflation ($11,180,000 in 2018 and $11,400,000 in 2019). Absent further legislation, this portion of tax reform sunsets on December 31, 2025 and the basic exclusion amount reverts back to $5 million per person, indexed for inflation. An issue…
You’ve gone through the motions of succession planning—groomed your successor, established and executed all the attorney-advised documents—and now you’re prepared to hand off your business, right? Not necessarily. Many family business executives actively or passively resist the transition process they once agreed to when it comes time to implement the plan. Even a well-crafted succession plan can fail if it lacks one key element: psychology. A focused review of the executive’s and member’s psychology should…
The three-circle family business model was introduced in 1978 by Renato Tagiuri and John Davis at Harvard Business School. The model represents three categories of individuals within a family business and the seven interest groups that result from all the combinations of these three. The diagram is a visual aid for representing the family business, and often explains why an individual feels a specific way about the family business and its operations. A. The three…
Businesses and the families that own them are each “governed” by a structure and set of rules. Often, that structure is informal and the rules unwritten, vague and inconsistently applied. This creates a virtual breeding ground for miscommunication, conflict and perceived (and actual) unfairness. Our clients have found that investing the time and energy to develop a more formal and intentional approach to governance pays huge dividends on many levels. While such a process is…
The Pacific Family Business Institute (PFBI) has just released the results of its 2018 survey. With support from Cascadia Capital, Moss Adams and Davis Wright Tremaine, PFBI interviewed 81 family businesses in Washington and Oregon, focusing on their governance and compensation practices. This was the first regional survey on these topics. Here are some of the key takeaways: Good Governance is Worth the Effort. 80 percent of the respondents consider the contributions of its Board…
Just as a family strives to provide funding for opportunities, a family business should consider establishing funds as reserves for particular purposes. According to Ramez A. Baasiri, author of Interrupted Entrepreneurship, these funds will “allow you to cultivate the next generation so they can handle a broad range of interruptions in entrepreneurship and have the peace of mind and skills to enhance their business resources for others to benefit from.” Education Fund. Establishing an education…
Most advisors recommend that a family business have and use a board of directors. In fact, the majority of closely-held corporations are formed with boards of directors, but those boards frequently consist of only a single individual. Moreover, there are very few actions that technically require board approval. So there is always a temptation in a closely-held business to avoid the hassle and complications of appointing a group of individuals to govern the business, calling meetings, taking…
Starting your family business is a period of excitement, chance, and perseverance. Once your business has survived this initial creation period, your business’ leadership and employees must maintain an opportunist mindset to ensure further success. Resting on one’s past success is not an option. An opportunist is someone who makes full use of his or her surrounding circumstances to gain an advantage rather than focusing solely on plans that are consistent with past performance. Maintaining…