We have noticed a trend in professional service providers, namely in large accounting firms, based around retirement.  To make room for younger partners, most accounting firms require their partners to retire around 60 years of age.  The problem is that while a partner’s business owner client is not retiring at 60, the partner must.  The trusted business advisor partner with knowledge garnered over 30 years of practice is gone.  This is where the Multi-Family Office comes in.

Let’s start with a story

Doug started his new construction business, Forest Homes, around 1980 and met a junior accountant, Sheila, at a local accounting firm, Brown and Taylor.  Doug didn’t need one of the national accounting firms and thought Sheila would fit the bill and she did.

Doug and Sheila weathered the high interest rates of the early 80’s – together they had difficult meetings with bankers and creditors.  Through good times and bad, Doug and Sheila worked together and got to know each other extremely well.  When the housing market crashed in 2008 Forest Homes had to restructure, re-finance and re-build.  Doug and Sheila put up a good fight and all survived.

Around 2015 Sheila’s firm, Brown and Taylor merged with a big 4 accounting firm, ABC Co, as a succession plan for its older partners.  Sheila stayed on.  Forest Homes didn’t fit ABC Co’s ideal client profile, but Sheila navigated Forest Homes through ABC Co’s various service lines to get the job done.  Fees went up, but Doug was still being served by Sheila and that was ok.  2018 comes around, Sheila hits 62 and has the mandatory retirement party (sans monogramed Rolex).

Doug was fully aware of Sheila’s mandatory retirement and Sheila tried to transition Doug and Forest Homes to a newly minted partner, Melanie, a 40 something tax specialist.  Melanie was extremely good at navigating CRA issues but had little business experience.  Doug and Melanie tried to build a relationship, but they were always speaking different languages – Doug talked about family and business and Melanie talked about technical tax issues.  Doug’s bank liked ABC Co’s professional brand – it also helped in bonding, insurance, and other security issues.  Doug made the decision to leave Forest Homes at ABC Co but needed a professional advisor who could understand his high-level issues like family planning, succession, family governance, and even his philanthropic goals.

Doug needed the services of a multi-family office that has the technical bench strength to understand his issues and who could work with him and his other professional advisors.  Forest Homes remained at ABC Co and we were engaged as Doug’s personal advisors (a CV TrustCo plug).

What we did for Doug was:

Estate and continuity planning

Through listening, reviewing and understanding his corporate and personal holdings, we prepared an estate plan that met his family’s interests and objectives.  We worked with his lawyers, ABC Co, and insurance and investment advisors to make sure his estate plan was sound.  No advisor was replaced, we all worked together.  In fact, Melanie thought it was a great plan and would allow her to focus on what she is good at, Forest Homes’ technical tax issues.

Our plan included an estate freeze that recognized the needs and dynamics of family members.  We also included a Joint Partner Trust for Doug and his wife to creditor protect them, minimize probate fees, and to ensure estate objectives are met.

Managing tax affairs

With the Estate plan in place, a degree of management was required.  Doug’s affairs are complicated and managing his tax affairs are not, nor should be, his strength; tax slips are required, trust returns need to be prepared, portfolio investments from various investment firms need to be compiled, rental property income needs to be reported, etc.  We manage Doug’s reporting including compiling information, trust and personal return preparation, and communicating with Melanie at ABC Co.

Family governance

Doug wanted to get his family involved in Forest Homes, not on an operational level, but on a knowledge and understanding level.  Our Family Enterprise specialists worked with Doug and his family to develop a family board, together with rules ensuring there is a process for making decisions and resolving disputes.

Philanthropic interests

Doug’s family board thought Forest Homes should give back to the community.  They resolved to set aside 10% of Forest Homes annual net income for giving.  We helped guide Doug’s family through the process of setting and reaching their philanthropic goals and ensuring their giving was strategic.

Our team created gifting policies and managed their donations, and ultimately helped them create and manage their own private foundation together with CRA filings and foundation reporting.

Yes, Doug’s financial affairs are complicated, but they are now aligned and managed.  Tax plays a role in all of this, but our discussions with Doug are all about where he and his family are going and the changes he sees in his affairs.  As Doug’s trusted advisor, we maintain, monitor and adjust his plan ensuring his goals and objectives are always met.

As an aside, the Rockefeller Family started the first formal family office in North America in 1882 and soon saw a need to serve other families through a multi-family office platform.

That’s it for this quarter.  Listen to Bonnie Henry, and see you next quarter.