In more than 20 years of practicing law, Tonkon Torp attorney Gwen Griffith has counseled many successful family-owned businesses that struggle when it comes time to transition the business from the founders to the next generation.
Griffith and colleague Bonnie Brown Hartley decided to pool their collective observations and experience and offer a roadmap to help families preserve the wealth they have created. The result is a new book, Family Wealth Transition Planning , just published by Bloomberg Press.
"It is challenging enough to manage a family business on a day-to-day basis. When a family seeks to transfer wealth to the next generation, the complexity of the task can be overwhelming and family relationships can be stretched to the limit," says Griffith, who is a member of the tax and wealth planning practice groups at Tonkon Torp LLP.
"In our work with families and their professional advisors - accountants, bankers, financial planners - Bonnie and I define successful family wealth continuity by three measures: healthy family relationships, responsible stewardship of wealth in all its forms, and the ongoing creation of a family legacy," said Griffith. "If you think only about financial capital, ignoring other important family assets such as human and social capital, you won't have a successful transition."
Griffith and Hartley, who also works with multi-generational business families, note that 80 percent of businesses in America are family owned, yet the vast majority of business schools don't teach family business management. That makes it especially tricky when families are trying to transition wealth generated by the family business, says Griffith.
"The transferees are often unprepared for their new roles, and the transferors often have difficulty letting go of their old ones," she said. "Creating any sustainable family wealth transition plan requires that the family and its advisors address not only specific wealth transition structures (estate plans, wills, etc.), but also governance systems (board of directors, decision-making authority, etc.) and role clarity. You can't afford ambiguity in family wealth transition."
To help professional advisors who work with business families, Griffith and Hartley have authored what appears to be the first book to offer a methodology for addressing interpersonal as well as legal and business management issues of family-owned businesses. They have also created a blog for family wealth advisors to post questions and discuss issues of common interest.
About the Authors
Gwendolyn Griffith is Of Counsel at the Portland, Oregon law firm of Tonkon Torp, where her business and tax practice includes business formations, reorganizations and dissolutions, and crafting complex wealth transition structures and governance systems. In addition to practicing law for more than two decades, Griffith has taught tax subjects at various law schools including Willamette University and the University of Oregon, is the author of several books on taxation and is a frequent speaker on transition planning, tax and other business-related topics. A graduate of Stanford Law School, she is a trained mediator and arbitrator.
Bonnie Brown Hartley is president of Transition Dynamics Inc., where she works with family offices, multi-generational business families and their businesses on mapping and implementing transition plans. This includes mentoring multi-generational families and their advisors on communication and relationship management. Bonnie serves on the Attorneys for Family Enterprise board and holds certificates from the Family Firm Institute in Family Business Advising and Family Wealth Advising. The author of four books on building strength and flexibility in families, she lives in Florida and Oregon.