Sudden Death Doesn't Have To Create Sudden Change

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Fred's Family Moves From Devastated To
New Discoveries

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. Ron likewise inherited his father's 50 percent following his death.

Ron was never happy about the succession decision his father made. He believed it showed his father didn't think he was good enough to lead the business. 

Ron also wanted to avoid having Fred's sons working in the business. He knew they were being groomed to succeed Fred when he retired at 75. 

Ron believed he would never get the chance to run the business, and he found this completely unacceptable. 

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

When Fred died, Ron appointed himself president without objection from Fred's wife, Leanne. He saw this as his opportunity to gain total control and ownership of the company. 

He approached Leanne and insisted she sell her interest in the business to him immediately. He implied this would be the only way she would ever see any real money from the business.

Leanne had no interest in running the business, and Fred had not told her 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 to sell her husband's interest to Ron.

Leanne sold her shares at a price 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.

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

After hearing that Leanne had sold Fred's interest in the business, her sons were distraught. They quickly realized their uncle had taken advantage of their mother. They believed he kept his conversations with their mother a secret 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 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 crossroads. 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.

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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 Clariata.

Fred's family used Clariata's tools and methods to articulate and identify precisely what they wanted for themselves and the 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 selling Fred's shares. The boys, who enjoyed working together, 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 most significant opportunity for growth and profits.

Working with their family attorney, they devised an ownership structure that gave Leanne more than enough income 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 multiplied. Within two years, the business produced 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 spent 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 thanks to their advisor and several of Clariata's key tools and methods.

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