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Diane and Tom, owners of a small manufacturing business, are proud of their daughters and the careers they’ve chosen. Megan, their oldest, has taken over the operations of their business. Their younger daughter, Shannon, is a pediatrician. Diane and Tom built their business and raised their children with similar integrity, resulting in a well-respected business and two strong and successful daughters. Fairness has always been very important to Diane and Tom. As they approach succession planning, they want to be sure their daughters are treated equally. Therefore, they intend to split their business equally between the two daughters. But is equal truly the fairest option when it comes to succession planning for a family business?

The Whole Picture 

Like many family business owners addressing their succession plan, Diane and Tom zero in on the family business and neglect to include their entire estate in their planning efforts. Proper succession planning considers assets beyond the family business. Founders should evaluate their whole estate and identify assets outside of the business that can also be bequeathed in an effort to achieve fairness.

When determining the future ownership of the business, family dynamics will certainly play a role. Sometimes leaving a portion of the business to a child not involved in the day-to-day can result in a significant amount of turmoil. Those in the business may feel slighted, as though their contributions to the company went unnoticed. Those not in the business may not have interest in becoming a co-owner. The solution most often recommended is to leave the business to children who work in the company and allocate other assets to children not in the business.

 Maintaining Leadership When Going Equal

However, some families may choose to leave equal shares of the business no matter the participation. When this occurs, maintaining leadership through an outside, experienced professional can mitigate issues around family dynamics.

Remember, successful succession planning goes beyond determining ownership. It also involves developing new leaders. While the founders’ children may be the owners of the company, it is important to consider if they have the talents, skills and experience levels needed to lead the company in that moment or in the future. Hiring external C-suite leadership teams to help navigate the family asset can benefit all those involved.


Regardless of how succession is determined, communication is the most vital component prior to the transfer of ownership. Open and honest communication eases the business transition and also helps to maintain strong family dynamics during an emotional time. The goal is that no one feels left out and no one feels misunderstood. Communication brings the family together and puts everyone at the same table with the same information. Good communication ensures:

  • If the transition occurs due to the passing of the founders, assumptions may be made and explanations become impossible. Face-to-face communication while the founders can still impact the business leaves both in a stronger and healthier position.
  • Including legal counsel and tax advisors in these conversations can be helpful as they can address tax advantages and legal protections.
  • Family members who are not a part of the business can better understand the purpose behind decisions. They can also gain a better understanding of their role in the future of the business.
  • There is a much higher chance of litigation when succession plans are not communicated to family members while the founder is still alive to address questions and concerns.
  • Family meetings provide just the right vehicle for working on a succession plan together.

For Diane and Tom, addressing succession planning now follows the path of integrity that they’ve traveled as they’ve raised their daughters and built their business. By looking at the whole picture and addressing leadership continuity, the succession plan becomes less about assets and more about harmony.

Communicating and sharing the plan maintains that harmony after they’re gone. For more information about succession planning for a family business that has children both in and not in the business, contact us today.

You get an oil change every three months to protect your car. You get a check-up every year to protect your health. You file your taxes every year to prevent issues with the IRS. But what are you doing to protect your family and your business when you will not be around to protect them yourself?

In the event of an unexpected death or tragedy, what can you do to make this time easier for those you leave behind? Create a crash card. The crash card contains and communicates all the information your family and business successors need in order to move forward with your estate and business. It lists the contact information for your trusted advisors, locations of important papers and login information for your accounts.

None of us want to think about preparing for the end of our own lives. It is sad, complicated and scary. However, if we avoid taking the time to properly prepare for this eventuality, we leave our family members and business successors in a difficult position at a stage when they are feeling emotional. Recently we helped a family manage the estate of a loved one who passed away. They almost missed out on a significant amount of insurance proceeds because none of the family members were aware of the policy and no documents were found with the other financial paperwork. Fortunately, when going through the client’s checkbook, it was discovered that the client had been making quarterly payments to a life insurance company. The family received the benefits, but they easily could have missed this asset.


 Crash Card Contents

 Communicating the Card’s Location

In a family business situation, we recommend annual family meetings, a sort of a state of the union address that includes all family members, even those not involved with the business. During this meeting, the location of the crash card should be communicated to the family along with a high level understanding of the succession plan.

 Personal Crash Card

All family members should have a personal crash card that includes all the information listed above as well as any additional personal accounts, including mortgage papers, credit cards and auto titles.


More than one person should know the location of your crash card. Many clients choose to store a copy in a safety deposit box or an in-house safe and have a trusted advisor hold onto the originals. Typically an attorney would hold this document along with the corporate record book, will, trust and other estate documents.

 Living and Breathing Tool

The crash card is not a one-and-done deal. It is a living, breathing document. It should be reviewed and revised once a year or at least every two years. We live in an accelerated, changing world in which your vendors, their contact information and your account access information changes frequently. An outdated crash card does not provide your survivors with the assistance and comfort that is intended.

Thinking about an event that leaves your family and business successors to manage your estate is likely not at the top of your list of things to do for the day. We have a story that may help you prioritize.

We were sad to learn that a well-loved client passed away unexpectedly. He had a number of companies where many people were involved, which could have easily increased the difficulty of this situation for his survivors. However, because he had a succession plan with all the relevant succession documents:  wills, trusts, shareholder agreements and operating agreements in place, his survivors could focus on dealing with losing him and on managing damage control for the business. While the ripple effect of losing this entrepreneurial and generous man will be felt forever, the enterprise he left is well-managed and well-executed. And it is all because he communicated with his survivors about the location of the information they would need to move forward in the event of his absence.

Let us help you stay on a path that ensures your survivors are also in as positive of a position as possible someday. Contact us today to start the process of developing your crash cards and succession planning documents.

In November of 2015, sponsors of audited employee benefit plans received a letter from the Department of Labor notifying them that over 40% of all audits submitted were not completed in accordance with auditing standards. Why is this concerning? Because audits that are not correctly performed create many issues for all those involved with employee benefit plans, including the plan sponsors, fiduciaries and participants.

Annual audits are an ERISA (Employee Retirement Income Security Act of 1974) requirement for plans with participants over a certain threshold and are attached to Form 5500. An audit verifies the assets of the plan and confirms the plan is operating according to the plan documents and in compliance with applicable laws and regulations. These audits have a filing deadline of October 15 each year.

Errors in plan administration can trigger issues with the IRS, including penalties, and can also cause legal problems for the plan’s fiduciary. More importantly, audits that are correctly done can detect a number of errors that, if not caught early, turn into major problems.  Commonly seen errors include: incorrectly calculated employee deferrals, employer matches, and deferrals for unique forms of compensation (like commissions or bonuses). Other common issues that may be uncovered with an audit include:

The November Department of Labor letter communicates the results of the DOL’s audit of plan auditors. The intent of the letter was to encourage plan sponsors to confirm that they are using qualified, experienced auditors. Plan administrators are held responsible as fiduciaries of the plan, and can be held personally liable if they are not making reasonable choices with regard to their plan. This includes due diligence with selection of their plan’s auditor.

While many accounting firms are choosing not to continue to offer employee benefit plan audits as a service, Cray Kaiser assures clients that we are uniquely qualified for this work. In addition to our commitment to quality and continued education in this area, our staff has a great deal of experience understanding the nuances of these audits. Cray Kaiser is also a member of the American Institute of Certified Public Accountants’ EBPAQC (Employee Benefit Plan Audit Quality Center), a group created to improve quality of benefit plan audits with news alerts, training, webinars, audit quality center and other resources.

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