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Death of a Legacy

By Mark Casella

When's The Best Time To Plan? Any Time BEFORE You Need It.


When Fred died three months after being diagnosed with cancer at 72, his wife Leanne and their two sons were not prepared for what happened next.


Fred and his cousin, Ron, co-owned the family business. Their fathers had started their logistics company many years ago. Upon their retirement Fred, who had just turned 55, was appointed to lead the company. He inherited his father’s 50 percent share of the business, and Ron likewise inherited his own father’s 50 percent following his death.


Ron was never happy about the succession decision that his father signed off on. He believed it showed his father didn’t think he was good enough to lead the business. He also didn’t like having Fred’s sons working in the business – he knew they were being groomed to succeed Fred who was planning to retire when he turned 75. Ron was convinced he would never get the chance to run the business.


What Happens When There's No Agreement In Place? Anything.


When Fred died Ron appointed himself president without any objection from Fred’s wife, Leanne. He interpreted this as his opportunity to gain total control and ownership of the company. He approached Leanne and insisted that she sell her interest in the business to him immediately. He implied that this would be the only way she would ever see any real money come to her and her family from the business.


Leanne had no interest in running the business and Fred had not told her that he was planning to appoint their sons as his successor when he retired. It did not occur to her to talk to the boys about their interest in the business. Not knowing Fred’s plan, she decided that she would sell her husband’s interest to Ron.


Leanne sold her shares at a price that was based on a formula in the operating agreement intended to discourage anyone from selling their interest. It was 40 percent less than its appraised value. The formula did not include a provision for selling an interest of a deceased owner at the appraised price rather than the discounted price she received. All Leanne knew was that she needed the money from the business to maintain her lifestyle.


The Fallout – Grief, Anger, and an Inability To Move Forward. 


Upon hearing the news that Leanne had sold Fred’s interest in the business her sons were very upset. They quickly realized their uncle had taken advantage of their mother. They believed he kept his conversations with their mother a secret from them because he didn’t want them to be his business partners.


The boys knew their father wanted them to succeed him in running the business someday. He saw it as a way of keeping the boys together. But, the operating agreement hadn’t been updated since it was originally drafted many years ago. No one imagined then that the business might be something for the 3rd generation of the family to consider. Nothing in the document gave guidance on transferring interests to next-generation family members.


Now Fred was gone and so was his share of the business. This put Fred’s family at a cross-roads. What would keep Leanne and her sons together now? Would the sale of the business be the end of the family? Everyone could go their own way. Or they could attempt to make the most of their circumstances to produce a more appealing outcome.


A New Path Discovered. Hope Restored. A Family, United.


Fred’s sons felt strongly about fulfilling their ancestors’ dreams of owning and operating a business. They decided they wanted to move forward as a business-owning family. Enter the Success Mapping Process™.


Going through the success mapping process, Fred’s family was able to articulate and identify exactly what they wanted for themselves and succeeding generations of their family. The family legacy would start anew with Fred’s sons.


Fred’s sons decided to start a new venture. Leanne agreed to bankroll the venture with the money she received from the sale of Fred’s shares. The boys, who enjoyed working with each other, would run the new business using what their father taught them. They narrowed their focus on the areas of the logistics business that provided the greatest opportunity for growth and profits.


Working with their family attorney they devised an ownership structure that gave Leanne more than enough income to allow her to do whatever she wanted. The ownership of the new business was placed in a trust that would further benefit Fred’s sons, their children, and future generations.


The family’s new business was an overnight success. Sales and profits grew quickly. Within two years, the business was producing far more income than Leanne would have received from the old business. Ron managed to run the old business in the ground and ultimately filed for bankruptcy.


The dream of owning a family business lived on in this new venture. Leanne lived out her days enjoying her time with her sons and their families. The family legacy survived and thrived because Fred’s family managed the sudden, unexpected change using the Success Mapping Process.


success mapping versus   traditional planning

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