Business Succession
 Planning

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Business Succession Planning
Larry Gilbert* is the founder and head of Gilbert Fasteners Inc. Larry 58, and his wife Suzy*, 45 have an eight-year-old daughter, Kimberly*, and Larry has three adult children from his first marriage: Martin, Steven and Christine*. Christine and Martin have important roles at the company. Larry is mentoring Martin to take his place as head of the company. Steven, a lawyer, is not involved in the business.

The Gilberts have worked with a full-service investment advisor for most of their ten-year marriage. Larry and Suzy have a joint cash account worth $900,000. Larry has a $400,000 RRSP and a cash account in his own name worth $120,000 and also pays support and has insurance for his first wife. Suzy has a $95,000 RRSP and a $350,000 cash account, established when her mother died last year.

Shortly after their wedding, Larry and Suzy created wills. Larry’s will indicates that Suzy would get the house and his RRSP and that the business would go to his three adult children. However, much has changed in the last decade, and now Larry wants Martin to get the business and to ensure that Kimberly is taken care of. Suzy’s will names Larry and her sister as executors, with all assets going to her sister. Suzy and her sister are American citizens, although Suzy hasn’t lived in the US since college and never worked there.

Suzy worries that she and Kimberly wouldn’t be able to manage financially without Larry. She and Martin don’t agree on much and she’s nervous about the likelihood that he is Larry’s executor. Larry and Suzy purchased life insurance years ago, but Suzy thinks Larry should have additional insurance for her.

Addressing the Situation
You, like the Gilberts, may understand how complex an undertaking it can be to keep a business in the family and ensure that estates are settled according to everyone’s wishes. Let’s take a look at solutions that can bring greater clarity to the situation.

* Fictional characters. Any similarities between them and actual clients of BMO Nesbitt Burns Inc. are accidental.