Business Succession Planning

This has been making its way around LinkedIn lately. Bravo to whomever put together this profile. (I’ll give anyone born before 1972 the opportunity to google this.) Now that we’re on the same page, why is a financial advisor writing you about Tommy Boy?

Big Tom nearly cost his posterity everything he built because of poor estate and business planning.

We’re all probably safe from what Big Tom had coming at him: Bo Derek, a young Rob Lowe, and an over-the-top Dan Aykroyd character.

Big Tom owned a business, was remarrying, and had a desire to involve his son in the family business. If there ever was a test case for estate and business planning, Big Tom was it.

Here are a few things Big Tom could have done to address the issues.

Buy/Sell Agreement

These are the documents a business owner would sign that stipulates what happens to his shares in the event of death, disability, dissolution, and divorce.

If Big Tom would have entered a one-way buy sell with his family, and then funded it either with cash or life insurance, they would have had the capital to buy out the spouse. And the spouse would be obligated to sell her shares back.

Key Person Insurance

If Big Tom had a policy that injected cash into the business upon his death or disability, the bank, which called its loans to the business, would have been paid back through the insurance arrangement.

Will and Estate Documents

Instead of defaulting to leaving the shares to the con artist widow, Big Tom could have left the shares in a family partnership or trust. This would help to shield his business from any mismanagement (sorry Tommy) and from con artists.

Tommy would have had time to work into the role, with the help of Richard (David Spade), instead of being forced to hit the road in a last gasp effect to save the business. I’ll admit, the plot of Tommy Boy would have suffered if Big Tom had his house in order.

If you’ve been putting off estate planning, I’d like to discuss how we can get you connected to a the appropriate attorney. Another resource some of our clients have found helpful is Trust & Will.

Check them out here:

Andrew Eppes, RICP®

Andrew Eppes is a registered representative of and offers securities and investment advisory services through MML Investors Services, LLC. Member SIPC. Nexus Advisors, LLC is not a subsidiary or affiliate of MML Investors Services, LLC, or its affiliated companies. 14241 Dallas Parkway Suite 1200 Dallas, TX 75254 972-348-6300. The idea of retirement means different things to different people. CRN202502-1630160

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