You’ve worked hard to build your business, and it’s a big part of who you are. No matter how great the selling price, how capable your successor, or how excited you are for the next phase of your life, change is hard. Our friends, Bob Hodges and Colin Hendricks, and their estate planning group from BrownWinick – Attorneys at Law, are focused on assisting individuals and business owners in structuring their operation so that assets (business and personal) transition from one generation to the next in a smooth and tax-efficient manner.

BrownWinick is a full-service law firm that can assist with nearly any aspect of your business or personal affairs. And they’re excited about their team. Their estate planning team is one of the deepest in the state – they have attorneys who have been practicing for years (like Bob) and young attorneys (like Colin) who can help implement your plan over multiple generations. Further, they have other subject matter experts (employee benefits, M&A, financing, regulatory, environmental, intellectual property, real estate, etc.) that can be consulted to the extent helpful.

Tell us a little bit about yourself and BrownWinick

Bob – A native of Louisa County, Iowa, I was drawn to estate planning when I saw the less-than-smooth transition of my grandfather’s cow/calf operation during my second year of law school (years ago). Everything worked out fine, but I knew that I could help clients transition their assets with less hassle and expense (legal or tax). In terms of schooling, I played football at Central College in Pella, went to law school at Drake, and, after serving as an attorney in the U.S. Army for 4 years, earned an advanced tax degree from Georgetown University Law Center in Washington, D.C.

Colin – For better or worse, I grew up in a family of estate planning attorneys. I was born and raised in Fort Dodge, Iowa, and my grandfather, Lewis Hendricks, and father, Steve Hendricks, have practiced in Rockwell City and Fort Dodge since 1947. Big shoes to fill, but I plan to travel around the state to continue helping Iowans create and implement their estate plans. I have economics and law degrees from the University of Iowa.

What are the typical problems clients are facing with succession planning when they come to you?

Trying to figure out a way so that beneficiaries (typically, your children) are treated fairly is difficult for most clients, especially when only one or two of the beneficiaries are involved in the business. Fair is not always equal, and equal is not always fair. Further, we often see businesses that have managerial concerns following transition. These managerial concerns can be with non-family key employees, family employees, or even no managerial succession abilities. We’ve seen quite a lot over the years and have strategies that have worked very well for folks.

How does BrownWinick play a role in the succession planning process?

To an extent, our role depends upon the client and the client’s team of advisors. With a large team, our focus becomes fairly narrow. If the team is smaller, the things we are thinking about tend to be a bit more diverse. In general, we think about three primary steps:

  1. We help organize your current operation and assets. Depending upon the historical interaction, we need to understand the current structure, ownership, buy-sell agreement. Often the client hasn’t read these documents in years (or ever). Once we understand the “base case,” often there are steps required to bring the business into compliance with the state of the art.
  2. We help structure (or restructure) your business so that you maximize your transition opportunities (intra-family succession or sale to third parties). After we take care of the business organization, we develop a plan that gets you from where you are today to where you want to be five years from now. This includes legal, tax, and managerial strategies to move the ball forward (and our role in developing these strategies, again, is somewhat dependent upon the size of the transition advisor team).
  3. We create estate planning documents designed to take care of your needs today and also take care of your needs as your assets grow (or change shape post-transition). The estate planning documents must coordinate with and reinforce the business transition plan.

What is the biggest myth you encounter when assisting clients with their succession plan?

People often view business succession as an insurmountable and scary task that needs to be accomplished in one year. Breaking a succession plan into small, easy steps usually obtains the best results, especially when done over multiple years. When done correctly, people generally find succession is less stressful than they’d previously thought. The other myth is that it is too early to start. We can think of clients who started to consider the transition of successful businesses in their late 40s.

What advice would you give to someone preparing their succession plan?

Bring your advisors together at the beginning of the process for a face-to-face meeting. Spending a little extra time and effort on the front-end so that all of your team understands the direction you want to take generally saves you time, money, and headache down the road. Further, it is helpful for the team to understand your intent and the other members’ role.